SAIC-GM-Wuling has had strong sales since the Chinese government cut taxes in half.

While bankrupt General Motors is struggling to hold market share in the U.S., its Chinese operations are posting record sales. Its two Chinese joint-ventures achieved sales records in May, as the Chinese economy grew and demand for minivans and cars increased.

GM’s minivan tri-venture with SAIC Motor and Liuzhou Wuling Automobile, sold 100,258 units last month. It was the first time that a Chinese automaker sold more than 100,000 vehicles in a single month.

GM’s joint-venture with Chinese automaker SAIC Motor, Shanghai GM, also saw sales increase more than 50% from a year earlier to 56,011 units in May, primarily from Buick brand sales.

In total GM’s vehicles sales in China were up 75% from a year earlier period to 156,000 vehicles in May, the company said.  In the U.S., its May sales were off 42%, to 190,881 units, with Buick declining 49% to 21,494 vehicles. If the current trend holds, GM China will soon be larger in sales than GM U.S.

Overall, China’s new vehicle sales rose 9.4% to 3.83 million in the first four months of this year, while sales in the U.S. through May have declined 37% to 3.9 million units. When final May numbers are released it is expected that China will continue to be the world’s largest car market.

Chinese Cash for Clunkers in place

SAIC-GM-Wuling has been booking strong sales since January when the Chinese government  cut taxes in half on small vehicles, and has now provided  Yuan 5 billion ($733 million) in rebates to encourage automobile sales in rural regions.

China’s National Development and Reform Commission (NDRC), a key industrial policy setting group, also announced last week that consumers who trade-in their used mid- and small-sized truck and some types of mid-sized passenger cars for new ones will receive rebates from Y3000 Yuan (about $438) to  Y6000.

Rebates will also be given to consumers who sell automobiles that no longer meet the government’s emission standards, but are still running. Consumers need to provide proof of disposal from recycling plants and receipts of the new automobiles they purchase to the local government.

In the U.S., a “Cash for Clunkers” bill, which provides incentives to scrap old vehicles and buy new ones, stalled in the Senate last week over disagreements about which vehicles qualify and how efficient replacment vehicles need to be. It has also been stuck in the House for months.

GM Bankruptcy and China

“Our operations across China will operate normally,” said Kevin Wale, President and Managing Director of the GM China Group. “Our customers will continue to receive top-notch service and warranty coverage, while our dealers will continue to receive product and after sales parts as usual. There will be no impact on payments to employees, dealers or suppliers contracted to GM China or to our joint ventures.”

“China has been the largest vehicle market in the world in the first five months of 2009. Industry sales grew 18.8% from the same period last year,” Wale added.  “Domestic sales of vehicles by GM China and our joint ventures continue to be strong, rising 33.8% year-on-year in the first five months.  We intend to remain an industry leader in China.”