In 2013, sales of General Motors vehicles in China were bested by those of Volkswagen for the first time in nine years, Bloomberg reports.
VW’s sales in the world’s largest car market grew 16 percent to 3.27 million vehicles in 2013 while GM reported deliveries of 3.16 million in the country last week. Earlier last year, GM vowed to invest $11 billion in its operations in the emerging car market, but despite the efforts, analysts believe GM won’t be able to recapture the top spot in China.
“Volkswagen will probably continue to grow more dynamically in China than GM,” said Frank Schwope, an analyst with commercial bank Nord/LB. “It’s going to remain neck and neck.”
Although it’s already the world’s largest car market, China has much more room for growth as the number of vehicles on the road depicts that only six percent of the country’s population owns vehicles. The opportunity for further growth in China motivated VW to commit $24.9 billion in investments into the market through 2018, bringing the total investment between the two automakers to a whopping $36 billion.
For VW, the largest contributor to its sales in China in 2013 was Audi. With deliveries surging 21 percent, Audi is the most popular luxury brand in China. Buick and Cadillac led GM’s 11 percent sales growth in 2013, while Chevrolet sales grew an underwhelming 4 percent.
To note, GM still has a significant opportunity with Cadillac in the Chinese market — but it will only be fully realized once the entire Cadillac portfolio begins being built locally in the country. This will eliminate the hefty import tariff assessed on most Cadillacs currently sold in China, thereby making them more affordable. Then we’ll see if Chinese luxury car buyers continue to prefer Audi.
Comments
It is the steak versus burgers comparison. If your product is cheaper, and more are consumed (in this case in accidents and breakdowns) then you sell more. GM vehicles are better made and last longer, so they sell less. Quality versus quantity again
@Raymondjram
I think it’s exactly vice versa. VW is selling much more upmarket products than GM and its joint ventures. Look how many Audis are sold in China in comparison to the numbers of Cadillac and cars like the Regal or Lacrosse.
The VW group and its joint ventures are simply doing a better job in China. They are selling more cars with higher martgins than GM. The VW group is doing that not only in China but in the whole world. This is the reason why VW is earing much more money than GM although VW sells less cars and has much more employees.
Consider this quote from the December 26, 2013, Autonews article “VW set to beat GM for China sales crown”
<QUOTE>
GM sells passenger vehicles in China under its Buick, Chevrolet, Cadillac, Opel and Baojun nameplates, and also counts the Wuling brand of mini-commercial vehicles.
Excluding Wuling from the tally, as researchers such as IHS Automotive and LMC Automotive do, the VW marque alone outsells GM’s main Buick, Chevrolet and Cadillac brands combined, according to company data compiled by Bloomberg.
</QUOTE>
The reason for not counting Wuling might be that GM owns only 44% of the SAIC-GM-Wuling joint-venture, which produces the Wuling LCV and Baojun passenger cars (which are exported to various markets worldwide under the Chevrolet brand).