The Chevrolet Captiva is one of GM's newest offerings in the Chinese market.
General Motors set another record in the booming Chinese market, selling 1.27 million vehicles there during the first half of 2011.
That’s good news for the Detroit maker, which last year became the first to sell more than 2 million vehicles in China during a single year. But GM’s 5.3% sales increase for the first half of 2011 marks a significant slowdown from much of the past decade, when annual sales jumps regularly measured well into the double-digits.
Analysts warn of new restrictions on vehicle ownership in traffic-snarled cities like Beijing, as well as the Chinese government’s decision to end subsidies for minivans – and increasing fuel prices.
On the positive side, the boom in automotive demand that has largely been limited to the Pacific Coast of China is now beginning to spread into the nation’s less economically advanced interior.
In April, GM announced plans to invest between $5 billion and $7 billion in a bid to more than double sales in China to 5 million by 2015. The maker has also launched a new brand, Baojuan, specifically targeting first-time buyers in second- and third-tier Chinese cities.
“The underlying trends in the market are very strong,” said Kevin Wales, president of GM China, when announcing the new plans, acknowledging that the maker has “set some aggressive goals.”
GM took a significant risk when it announced its first plant in China more than a dozen years ago, but the risky move has paid off handsomely, the huge market expected to deliver major profits for the company going forward.
The U.S. maker initially entered China with the Buick brand, but today, its joint venture Wuling marque is its biggest seller. It also markets under Chevrolet, Cadillac and Opel nameplates, as well as the new Baojun.
Year-over-year Buick gained 28% during the first half of 2011, accounting for just over a third of the company’s overall Chinese volume. Cadillac jumped 88%, but at 14,078, it makes up a small portion of GM’s overall demand.