Today, General Motors revealed its growth strategy for the next five years in China — the world’s largest vehicle market. Presented by GM President Dan Ammann and GM Executive Vice President and GM China President Matt Tsien during a conference in Beijing, the plan focuses on four key pillars:
- Introducing more than 60 models through 2020
- Addressing growing demand for SUVs, MPVs and luxury vehicles
- Rolling out more than 10 new energy vehicles
- Continuing investment in shaping the future of transportation
Overall, the strategy will result in an even stronger product mix, greener technologies and smarter solutions for personal mobility.
GM’s Largest Market
China continues to be General Motors’ largest market by sales volume. In 2015, China accounted for more than one-third of the company’s global deliveries.
The automaker expects China’s vehicle market to grow by 5 million units or more by 2020, representing growth between 3 and 5 percent annually.
“GM is very well positioned to participate in this growth,” said Tsien. “We will continue to focus on the segments where the demand is strong and growing. This has been a key to our success from day one.”
Between now and 2020, GM and its joint ventures plan to launch over 60 new and refreshed models in China. The mix will lean heavily towards SUVs, MPVs, and luxury vehicles. Of those 60, 13 will be rolled out this year.
“Our core business of selling great vehicles today is what will fund our investment in tomorrow,” said Ammann. “The China market is maturing and it will still be a tremendous source of growth for us in both the short term and the long term.”
SUVs, MPVs and Luxury Vehicles
GM expects roughly 4.2 million units of growth in China’s SUV, MPV and luxury segments through 2020. Of that, the luxury segment is expected to generate compound annual growth of more than 10 percent during that period.
To capitalize on this trend, about 40 percent of the new vehicles that GM launches in China over the next five years will be SUVs and MPVs. Meanwhile, The General’s prestige luxury brand, Cadillac, will introduce 10 new and refreshed models by 2020.
New Energy Vehicles
In addition, GM and its joint ventures will roll out more than 10 new energy vehicles under the Chevrolet, Buick, Cadillac and Baojun brands by 2020. These include the Shanghai-built Cadillac CT6 PHEV (Plug-in Hybrid Electric Vehicle) that will go on sale later this year.
Refreshing The Portfolio
The Chinese market will also benefit from GM’s global initiatives to accelerate the refreshing of its vehicle portfolio.
Starting in 2016 and during each of the next few years, 40 percent of the company’s global sales are expected to come from new and refreshed models. This is a significant increase from the 25 percent seen in 2015.
GM says that several of these vehicles will be developed, built and sold in China.
Vehicles For Growth Markets
In July of 2015, GM announced that it will invest $5 billion over the coming years to develop a family of vehicles for global growth markets.
Set to be developed with GM’s Chinese partner SAIC, the new vehicles will replace several current vehicles for growth markets based on multiple architectures with an even larger family of vehicles based on a single core architecture.
In addition to vehicle-related initiatives, GM will also address business opportunities in value-added services such as automotive financing and insurance.
Its SAIC-GMAC joint venture is the largest dedicated automotive finance company in China. By the end of this decade, GM sees potential for up to 40 percent of car buyers in China to finance their purchases, compared to about 30 percent in 2015.
The INSAIC joint venture will continue making it easier for customers to obtain insurance when purchasing GM vehicles. It will further channel vehicles to GM dealerships for repairs, providing customers additional peace of mind.
By the end of 2016, GM will have 12 million OnStar-connected vehicles on the road. And by 2020, more than 75 percent of its global sales volume is expected to be actively connected via an OnStar connection.
Personal Mobility Initiatives And Investments
Simultaneously to developing its core business, GM is executing a plan to capitalize on the future of personal mobility using tools such as connectivity, ridesharing, car sharing and autonomous driving. The automaker holds nearly 500 connectivity patents and has been the industry leader for two decades with OnStar.
Shanghai OnStar and Midea Group
Earlier this month, Shanghai OnStar and the Midea Group announced a unique strategic partnership to integrate onboard telematics and smart household technology in an effort to enhance the consumer experience.
GM and Lyft
GM recently announced a long-term strategic alliance with Lyft to create an integrated network of on-demand autonomous vehicles in the United States.
The automaker will invest $500 million to help the company continue the rapid growth of its successful ridesharing service.
In January 2016, GM started its own personal mobility brand called Maven. The brand combines and expands the company’s multiple car-sharing programs, including the EN-V 2.0 pilot program with Shanghai Jiao Tong University.
Cruise Automation Acquisition
Following the Lyft partnership and Maven launch, GM earlier in March of 2016 acquired Cruise Automation. The acquisition is said to “add Cruise’s deep software talent and rapid development capability to further accelerate GM’s development of autonomous vehicle technology.”
The GM Authority Take
That’s a solid plan for an important market. Even so, we expect to see some of the strategic initiatives outlined in the Chinese plan above to permeate across GM’s various global divisions, including GM North America and GM Europe.
We feel responsible to add that although China is GM’s indisputably the largest market by sales volume, it is far from the most profitable. To whit, during calendar year 2015, GM International Operations (GMIO) of which GM China makes up the overwhelming majority of sales and earnings, earned $1.4 billion. By comparison, GM North America (GMNA) of which the U.S. market represents the overwhelming majority — accounted for $11 billion in earnings.