GM celebrates China market growth
But US sales fall as the car giant reports its worst quarterly results in 13 years
Just hours ahead of its worst quarterly results since 1992, General Motors Corp (GM) yesterday announced rising sales in China and an increase in market share to more than 10 per cent.
The world's top carmaker held a lavish ceremony, complete with a symphony orchestra and attended by some of its top brass from Detroit, to unveil the models it will exhibit at Shanghai's international motor show that opens on Friday.
'The China market is vital to us,' said Bob Lutz, GM vice-chairman for global product development. 'The importance of this market extends beyond our bottom line and beyond China.'
Last year, GM had record sales in China of 492,014 units, up 27.2 per cent from 2003, and a market share of 9.3 per cent. In the first quarter of this year, sales were 132,401 units, up from 130,431 year on year, taking its market share to more than 10 per cent.
Yesterday, GM reported a first-quarter net loss of US$1.1 billion as US sales fell and the company lost market share. The loss was US$1.95 a share.
Last month, GM shocked the markets by slashing its earnings outlook to a loss of US$1.50 per share, down sharply from a previous forecast of break-even or better, because of falling sales and rising healthcare costs.
Amid this gloom, the growth in China is a beacon of light.
Robert Leggatt, a GM official, forecast sales growth for the full year in China at about 10 per cent. 'The profit margin is thinner because of competitive pressure and higher raw material costs, especially for steel, but remains healthy. We are closing now on market leader Volkswagen.'
Yesterday's event was the first public appearance for Kevin Wale, president of GM China since the shock resignation on March 30 of Philip Murtagh, the president since July 2000 and the architect of GM's success in the China market.
'It was for personal reasons,' Mr Leggatt said. 'We did not want him to leave.' He did not elaborate.
The Chinese media has been full of speculation over the reasons, including differences with the chiefs of the Asia-Pacific headquarters after it moved to Shanghai, with the bosses in Detroit over the pace of expansion in China and a sense that he had seen the group through its best years here, with the future to be marked by falling prices and profits and growing competition.
There have been unconfirmed reports that he will move to Ford Motor in China or Shanghai Auto Industry Corp, GM's principal partner that aims to become an global manufacturer and badly needs the expertise of people like him.
The newest model unveiled yesterday was the Aveo, a four-door passenger car built on a global platform from GM Daewoo. In China, it will be built and assembled by Shanghai GM and is due to be on the market in 12 months.
