GM Posts Its Biggest China Sales Decline
January 07 2020 - 6:55AM
Dow Jones News
General Motors Co. posted its biggest ever sales decline in
China last year and warned of another tough year ahead,
underscoring the challenges that U.S. car makers are facing as the
world's largest auto market suffers its first protracted decline in
nearly three decades.
GM said Tuesday that it sold more than 3.09 million vehicles
last year in China, its biggest overseas market, roughly a 15% drop
from 2018. It was the second straight year of falling sales in
China. In 2018, sales slumped by about 10%--its first ever
decline.
And the Detroit company doesn't expect things to improve
quickly. "We expect the market downturn to continue in 2020, and
anticipate ongoing headwinds in our China business," Matt Tsien, an
executive vice president who heads the auto maker's business in
China, said in a statement. GM is focused on cost-cutting and
improving its product lineup, he said.
China's overall auto market, once a reliable source of growth
for global auto makers, started contracting in July 2018 and has
since become a trouble spot for many companies.
While many foreign and domestic auto makers have struggled as
China's economy slows and auto subsidies expire, U.S. companies,
including GM and rival Ford Motor Co., have fared particularly
poorly.
Through the first 11 months of 2019, the combined market share
for American companies shrank by 1.5 percentage points, while those
of German and Japanese car makers grew, according to data from the
state-backed China Association of Automobile Manufacturers.
Full-year data is expected Jan. 13.
GM, the second-largest foreign brand in China by sales in 2018,
has now suffered six straight quarters of sales declines there in
year-over-year terms.
Meanwhile for Ford, its sales in China for the third quarter of
2019 tumbled 30.3%. After its disappointing third-quarter earnings
report, Ford cut its full-year profit outlook for 2019, citing
higher warranty costs, bigger discounts and weaker-than-expected
performance in China. The Dearborn, Mich., auto maker is set to
release its 2019 full-year results for China in the coming
days.
GM's troubles in China add to growing headaches back home. In
2019, it sold nearly 2.9 million vehicles in the U.S., a 2.3%
decline compared with 2018.
In late October, GM executives blamed this year's sales downturn
in China on weak demand for GM's older outgoing models and overall
market volatility. In China, GM has a joint venture with the
country's largest car maker SAIC Motor Corp, with which it
manufactures Buick, Chevrolet and Cadillac passenger vehicles.
Chief Executive Mary Barra told analysts that the company is
introducing new vehicles in China that she hopes will lift sales,
including a small Chevrolet sport-utility vehicle called the
Trailblazer and a large SUV, the Cadillac XT6.
She said the auto maker hadn't detected any negative sentiment
from consumers related to the U.S.-China trade tensions. Through
the first three quarters of 2019, GM earned about $893 million from
China, nearly half of the $1.7 billion it earned in the same period
a year earlier.
Luxury brands have generally performed well despite the market
downturn, and in 2019, sales of GM's upscale Cadillac brand reached
a record high of 213,717 units in China, a 3.9% increase from
2018.
Many industry experts said the auto market decline would
continue this year. The CAAM estimates the market will fall by 2
percent in 2020.
Yin Yijun in Shanghai and Mike Colias in Detroit
(END) Dow Jones Newswires
January 07, 2020 06:40 ET (11:40 GMT)
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