GM's China sales top U.S. total, a first for the automaker

General Motors' sales in China increased 28.8% in 2010 while U.S. sales rose just 6.3%. GM is one of the best-positioned automakers in emerging markets, even better than Toyota, says one expert.

By Jerry Hirsch, Los Angeles Times
January 24, 2011, 9:16 a.m.

General Motors Co. sold more vehicles in China than it did in the U.S. last year, marking the first time a foreign market has outpaced the automaker's domestic sales in its 102-year history.

"This is the wave of the future," said George Magliano, an economist at IHS Automotive. "The Chinese market is going to grow faster than the U.S., and it will continue to be this way."

GM's sales in China rose 28.8% last year to 2,351,610 vehicles, GM said Monday. U.S. sales rose just 6.3% to 2,215,227, in part because of the slow economy and GM's closure or sale of the Saturn, Pontiac, Hummer and Saab brands as part of its financial restructuring.

Brazil was the next-largest market for the automaker with sales of 657,825, a 10.4% increase. Overall, GM's global sales rose 12.2% to 8,389,769 vehicles last year.

Despite its bankruptcy reorganization in 2009 and efforts to turn around the American market, GM remains one of the best-positioned automakers in emerging markets, Magliano said.

"GM took the big risk moving into China with Buick some years ago, but now its global footprint is actually better than even Toyota's," he said. "Ford has made some good moves, but they are still trying to catch up in emerging markets."

GM recently announced that it expected to export about $900 million in vehicles and components to China over the next two years.

GM does not accrue the same benefit from a sale in China as it does from a sale in the United States because its business there is split with three joint-venture partners. Because of growing competition and expansive manufacturing capacity in China, vehicle transaction prices are falling, and that's likely to squeeze profits, Magliano said.

Nonetheless, the auto market is growing almost too fast for Chinese cities to control traffic. Car registration in Beijing has increased to 4.8 million from 2.8 million since 2005, with 700,000 new cars registered in the last year alone. The boom has created massive traffic problems in China's capital.

The Chinese government now limits the number of new license plates in Beijing to 240,000 awarded annually through the lottery system.

In 2009, China surpassed the United States as the largest automobile market in the world. Across the nation, sales of passenger cars rose 33% in 2010 over the previous year, the China Assn. of Automobile Manufacturers reported.

Business is also turning up in America, GM said. The automaker announced Monday that it planned to add a third shift at its factory in Flint, Mich., a move that will generate 750 jobs. The plant makes the Chevrolet Silverado and GMC Sierra heavy-duty pickups.

The shift is expected to start in the third quarter, with employees starting to work in the second quarter.

"Adding a third shift is a response to customer demand for heavy-duty pickups, which most people use to tow, haul and plow," said Mark Reuss, president of GM North America. ... 9923.story