On the heels of slumping sales, Shanghai GM — General Motors’ primary joint venture in China with the SAIC Motor Corporation responsible for the Chevrolet, Buick, and Cadillac brands — has announced cuts in the prices of its vehicles.
The cuts span 40 models across the three brands, with some cuts being for as much as 53,900 yuan ($8,700).
In April 2015, Shanghai GM sales dropped 6.7 percent year-over-year to 119,032 units:
- Buick sales were down 8.5 percent to 63,307 units
- Chevrolet sales were down 5.6 percent to 49,528 units
- Cadillac sales were up 4.6 percent to 6,197 units
The growth of the Chinese auto industry has been been slowing, with April seeing the slowest passenger vehicle sales growth in five months. The slowing growth pace has placed increasing pressure on foreign automakers in the country, as local brands that offer cheaper vehicles see the most growth.
“In years to come we expect 2015 to be known as the start of China’s Great Moderation,’ as pricing and margins fall from levels far above global norms,” Robin Zhu, senior analyst at Sanford C. Bernstein Ltd., wrote in a report today.
Zhou believes that the effects of a drop in Chinese market profitability “may be substantial”.
Outside of the discounts, foreign automakers are offering other incentives such as subsidized insurance, zero down payment programs, interest-free financing, exemption of purchase tax and trade-in subsidies.
Comments
Despite some recent positive press, this is how things shake out year-ro-year?
Buick sales were down 8.5 percent to 63,307 units
Chevrolet sales were down 5.6 percent to 49,528 units
Cadillac sales were up 4.6 percent to 6,197 units
And now they’re cutting prices. I don’t think China is the life raft GM’s been expecting/promising.
Buick’s no longer a gimme. Chevy’s down. And Cadillac – well, 6000 units as a percentage of China’s 1.4 billion population…
Good news, I guess, is that Shanghai GM owns 51% of the operation. So the ‘new GM’ here is only taking 49% of the hit.
By positive press, I meant this headline from a couple of days ago,, for instance:
“General Motors China Sales Up 7.1 Percent To 1.2 Million Vehicles For First Four Months Of 2015”.
63 + 49 + 61 does not equal 1.2 million. Even if you throw in the Chinese makes, that would mean they’d have to sell about 800k to make it to 1.2 million. Fuzzy math.
They should cut them in the US, too. Cruze, Malibu, Encore, and more play in the big leagues in price, only. Still not sure what possesses someone to buy a $25K Cruze when you can get something better at Honda, Toyota for a lot less, or something with AWD at Subaru, also for a lot less. None of those brands shed 50% value the instant you drive it off the lot, either. Just an example. To each his own. Not everyone uses brains for thinking.
I think cutting prices in China is the right thing to do. To dominate any market you need to have a good product and it needs to be a good value. If GM was smart they would reduce prices on the CTS and ATS in the US. The current price of the CTS Sedan is probably $5,000 too high and an ATS cost a much as the previous generation CTS, but is not as much car. Simply stated, both are good cars, but neither is a good value. Sales are suffering as a result. The current generation SRX is still a pretty strong seller, if next year’s replacement, the XT5 is significantly more expensive those sales will tank just like CTS sales have. Its clear that Cadillac is losing share because of the new President’s “Premium Pricing Policy”. I hope GM execs take their heads out of the sand before its too late.
FrankR has it right . If you over-price your products and the consumer can’t see paying for it , there goes your sales . There was an article recently from a GM executive that is retiring that siad Cadillac ‘s engineers still have the old arrogance that they are better than anyone else and will build what they want , and are not listening to what the market is telling them . The over-priced XLR , ATS and CTS resulted in poor sales . And if they do it to the XT5 people will go elsewhere . A high price DOES NOT = quality or prestige . He also stated that its going to take more than the 12 billion that has been alocated for the division . While Cadillac tries to reinvent itself , the consumer isn’t going to stand by and wait for them to get their $hit together . Just more money lost and a dwindleing market share .