General Motors’ sales in the Chinese market have slid considerably in the last several years, dropping from a peak of four million units in 2017, to a projected 1.8 million units in 2024. GM China sales fell 29 percent during Q2 of the 2024 calendar year. The drop-off in sales is largely due to a surge in competition from low-cost Chinese domestic EVs that dramatically undercut the company’s offerings in price. Nevertheless, The General sees a path to profitability in the world’s largest auto market, and has outlined what that path looks like.
Recent financial reports paint a rather grim picture, with a $104 million loss in equity income during the second quarter of 2024, following a $106 million loss in the preceding quarter. The company’s market share fell from 11.2 percent in 2021 to 8.4 percent in 2023.
Company CEO Mary Barra has acknowledged the challenges that General Motors is facing in China, while calling out the numerous unprofitable automakers “prioritizing production over profitability,” particularly as Chinese EV startups dominate the market, per The Detroit News. Nevertheless, General Motors remains committed to the Chinese market going forward.
General Motors’ strategy for recovery includes the launch of several new plug-in hybrid and all-electric vehicles, including notable releases like the Chevy Equinox PHEV and Buick GL8 ES PHEV, all while leveraging local brand equity for Buick and Cadillac.
“There’s got to be a sorting there,” CEO Barra recently told The Detroit News in May, referencing an influx of unprofitable Chinese EV startups. “You can’t have a race to the bottom. I think GM can play especially with the strength of our Cadillac brand and our Buick brand. I think in some cases we were later than we should have been to get the right portfolio of EVs there.”
Additionally, GM will sell premium imports like the Chevy Tahoe and GMC Yukon through the high-end The Durant Guild platform. General Motors opened its first Durant Guild storefront in Shanghai over the summer, with the Chevy Tahoe first offered in China last month. Other high-end imports could include the GMC Hummer EV, Cadillac Celestiq, and Chevy Corvette C8.
Essentially, General Motors aims to return to profitability in China through more upmarket offerings, rather than through sales volume. However, despite these efforts, some remain skeptical about GM’s long-term prospects in the Chinese market, with analysts predicting continued losses through 2028.
General Motors is already cutting its workforce in China to reduce costs. Recent reports point to cuts in GM China’s research and development department, and General Motors is also expected to engage local partner SAIC Motor Corporation to identify additional capacity reductions.
Comments
“while calling out the numerous unprofitable automakers “prioritizing production over profitability,” particularly as Chinese EV startups dominate the market, per The Detroit News.” <— Ah yes. The classic “I could have never known this would happen” excuse while the rest of us knew putting 50% of your eggs in this basket was a dangerous investment. Meanwhile you continue to neglect your home market. So not only are you taking the Chinese market for granted, you still haven’t learned to take your own home market for granted either. And now those chickens are coming home to roost. Better start diversifying your markets GM.
Maybe start by showing the same love and affection to your US customers as you do with your Chinese customers. Start selling products Americans actually want like the new XT5 and not what you think we should buy. Because just like those Chinese customers are forgetting about you so can American customers. And as with life, you neglect the family that supports you at home, they won’t be here when you come back after your overseas family leaves you. I alone, cannot keep you afloat.
China is becoming a mature capitalist economy similar to that to the US, Western Europe, Japan, and Korea.
GM need to get ahead of the ball game and enter developing economics of Brazil, Southeast Asia, India, and the Middle East and develop a brand recognition.
Exactly. But instead, they are doing the opposite. They pulled out of India just a few years ago. Middle East they are in the same boat as the US. Sales mostly from large SUVs and trucks and thinking of their lineup as second thought. And that market they are competing with Toyota and Nissan which surpass them in popularity. Affordable cars in the Middle East are being ceded to the Chinese and Koreans. The only outlier here is Brazil which there has been a string of articles of GM investing in Brazil.
Outside, Beijing, Shanghai, Hong Kong, and Shenzhen, China is a dump. The GDP in 2022 was $12k per capita. That’s a shole country.
Not exactly true – there are a lot more middle income metros in China. But even if you were to say that was true, that’s 72mm people in your list, larger than the UK, France, Italy, Korea, Spain or Canada.
Go out for a walk more
Seems like a bit of an act of desperation to me…… Already, supposedly, much of the Chinese GM output gets exported to MEXICO just to minimize the amount of dust settling on the unused factories.
Don’t really see how they’re going to sell enough to even break even since as a 33% partner they can’t make that much anyway.
Their sales are declining at rate of between 300,000-400,000 units per year in China. They’ll likely end up becoming a niche player. MUCH lower volume with premium prices in order to return to profitability. They’ve signaled that possibility already. If that doesn’t work gm has had no qualms about pulling out of markets PDQ.
Meanwhile globally, they’re looking at sales of about 5.8M units this year. A steady and consistent decline from 9M global sales from just 7 years ago. One has to wonder where the bottom is.
Well that’s what happens when you put all your eggs into one basket and neglect the other baskets in favor of the one. Or if you are an investor, invest all your funds into one stock and forget about the rest. Any wise investor will tell you to diversify. What happens when that one stock fails to deliver and the other ones you pulled from aren’t there to recover? You lose money rather than blunt the blow or recover it. GM pulled out their other investments like Europe, Australia, India, etc., to put them all into China and the Americas as a second thought. I cannot understand what the dolt at the Renaissance center was thinking with this move. Now that one investment is failing and the other ones they neglected are losing interest or have lost it entirely. And now it will be an uphill battle to try to regain that interest in Europe and Australia. I just hope they don’t enter an endless spiral downward of losses.
GM is dead in China. And they will be dead in the US too if they still try to go “ALL EV BY 2030!”
Realist, your logic seems to contradict itself. Your assertion that GM is dead in China would rest upon the notion that the market moved rapidly up the S curve of adoption on electrified vehicles and they did not move quickly enough to address that market. Then you say that they will be dead too in the US if they move quickly to EV adoption in the US.