May 23, 2012 at 10:31 pm #38283
Were always hearing about how great GM is doing in China and how its the marker leader.
But there’s a few things that just don’t add up:
Why inst GM making a decent amount of profit in China, I know there’s regulations and additional expenses and stuff, but if there selling more cars in China than in the U.S, than shouldn’t they make at least half the profit in China than how much they make in the U.S.
Whats the deal with Wuling and SAIC, is GM getting the short end of the stick in their joint venture?, are they just using GM to increase their technical know how, and raise there quality, then dump GM. So is GM helping a company that will come back to haunt them.
Without Wuling and SAIC, is GM really the leader in China its been made out to be, is Toyota and Volkswagen beating GM in the long term without any complicated joint ventures?
And if they really are behind in China excluding joint ventures, than what can be done to put them ahead of the game? And is GM falsely believing its ahead when its not?
*This post was inspired by a comment Alex made in the GMC ALL-Terrain HD post, didnt want to hijack that thread.
May 25, 2012 at 1:20 pm #40028
China does not let foreigners do business in their country. Every thing must be a joint venture. GM gets to count all of the sales as GM. I don’t know how they split the profits.
May 26, 2012 at 12:14 pm #40042
@Babersher Very, very good questions, sir. This is a complicated topic and I apologize in advance for my long-winded answer, but here goes:
To start, @mainframewayne is spot on — no “foreign” (non-Chinese) company can do business in China without a tie-up with a local company. GM got in bed with SAIC, so did VW, which operates a similar joint venture to GM’s called VW-SAIC. The Chinese companies handle only one thing: sales and distribution (dealer network).
Now, the sales reporting side of the equation is quite shady, as model-by-model sales numbers are never provided like they are for GM’s North American operations. The profit split is even more so, since China financials are bunched in with GM International Operations. Every single email we’ve sent to GM’s press contacts in China has never seen a reply (we’ve sent 15 over the last six months or so). But here’s what we do know:
– GM and its “partners” — which are only partners by force, rather than by choice — sold 1 million units in the first four months of 2012 in China:
– 227,217 cars were sold in April, alone. Let’s focus on those for a minute.
Out of those 227,217, GM’s vehicles (by Shanghai-GM) sold 94,101 units. Out of those 94,101, 54,013 were Buicks, 41,555 were Chevys, and a measly 2,048 were Caddys. GM is addressing Cadillac’s low sales issue head-on with local production plans, which are pretty much a prerequisite for local success:
– Buick is highly successful mostly thanks to one model: the (original) Excelle, which is a badged-up and slightly dressed-up Daewoo Lacetti. The car is cheap (under $20,000) and sells about 20,000 units a month — or around half of total Buick sales in China:
Even without the Excelle/Lacetti, Buick sells about 20,000 units of its other models (Excelle GT/XT or Verano, LaCrosse, Regal, Park Avenue, and GL8 van).
– In April, SAIC-GM-Wuling — which contains zero GM-engineered vehicles — sold 127,362 cars out of the total 227,217 reported. So that’s zero GM vehicles, all SAIC and Wuling pieces of garbage.
– FAW-GM sold 5,141 units in April; these are mostly commercial trucks, busses, and pickups, and — just like SAIC-GM-Wuling — contain zero actual General Motors vehicles.
It’s my personal opinion that the state of the local Chinese auto industry is bleak. That is to say that the Chinese themselves are far from being able to design, engineer, and produce a world-class vehicle equivalent to those from GM, Ford, VW, Toyota, Hyundai, etc. But thanks to these government-forced tie-ups with major world automakers like GM, the Chinese are learning to “do it the right way”… and will eventually dissolve the partnerships and attempt to overtake their original partners in world markets, including China and elsewhere around the globe. To me, it’s not a question of “if”, but rather of “when”.
In that respect, it seems that the partnerships are short-sighted in nature, where GM (Ford, VW, etc.) basically teach (read: give away trade secrets to) the Chinese to develop and then build world-class products, only to create future competitors. It’s smart on the part of the Chinese government, but not so much for established world-class automakers, GM included. But that’s just my opinion.
In the long run, GM needs to find ways to rid itself of the Chinese overlords, stop sharing (transferring) knowledge and technology for free, and build its own brands (and their sales) without the help of any “partners”. How this should/could be done in the face of current national Chinese business and trade regulations is unclear, but I’m sure is possible with enough business- and street-smarts — both of which GM definitely has and/or can obtain.
May 26, 2012 at 8:27 pm #40045
Nothing to apologize about, great answer
But is GM ahead of the game excluding joint ventures compared to Volkswagen and Toyota?
May 28, 2012 at 7:14 pm #40061
Separately, Toyota and VW sell less in China than GM.
In April, Toyota (and its 2 joint venture “partners”) sold about 81,000 units, while VW did approximately 72,000.
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