IHS Global Insight Perspective | |
Significance | GM has sold more vehicles in China than the United States for the first time in 2010, according to the company's own measure of group sales, as GM's global sales increased by a healthy 12.2% y/y during the year to 8.39 million units. |
Implications | GM significantly closed the gap on Toyota during 2010 with the Japanese OEM suffering demonstrably from last year's recall scandal. However, Toyota narrowly beat GM with sales of 8.42 million units during the year. |
Outlook | It is symbolic of the growing importance of the Chinese market that GM has sold more cars there than in its domestic market, with the majority of GM's volume growth being generated in what is now the world's biggest passenger car market. After the setback of government-administered bankruptcy and collapsing sales in 2008 and 2009, GM's recovery appears on the surface at least to be gaining momentum. |
General Motors (GM) has posted a healthy rise in 2010 sales to 8,389,769 vehicles globally during the calendar year, equating to a 12.2% year-on-year (y/y) rise in sales volumes from last year's 7,477,178 million units, according to GM's own data. GM reported double-digit volume increases in five of its top ten national markets during 2010, including China, Brazil, Russia, Mexico and Uzbekistan. However, there were also substantial reverses in certain key market territories as well such as Germany, where GM's Opel brand had been one of the leading beneficiaries of the ultra-successful German scrappage scheme in 2009. Because of this extremely high base, Germany posted an equivalent decline of 29.5% y/y, dropping Germany to fifth in the list of top markets by country. The real driver for GM's global sales growth has come, is it has for nearly every global OEM, from China, with GM enjoying a particularly robust year for sales there. Last week it was reported that GM has the best-selling single passenger car joint venture (JV) in the Chinese market with sales of 959,900 units, according to data released by the Chinese Association of Automobile Manufacturers (CAAM; see China: 17 January 2011: Shanghai-GM Tops Chinese Vehicle Sales Chart During 2010, According to Association). However, GM's own data put the outright sales figure even higher for Shanghai-GM, with sales rising 42% y/y to 1.03 million units. Elsewhere in China sales from the three-way mini-commercial vehicle JV with SAIC and Wuling, SAIC-GM-Wuling Automobile, totalled 1.2 million units. GM includes GM Wuling's volumes in its group sales despite only having a 35% stake in the JV. IHS Automotive's own data strips out volumes from units in which the main group holds less than a 50% stake. Therefore GM's claims must be considered with this caveat. The partial recovery in the U.S. economy was enough to propel the carmaker to 6.3% y/y volume growth in 2010 to 2,215,227 units. GM retained its position as the leading U.S. OEM Group by sales volume during 2010, but the company actually lost market share during the year in its home market, with Ford, Chrysler and Nissan all making significant share gains in comparison to GM. Brazil was the next-largest market for the automaker with sales of 657,825, up 10.4% y/y from the preceding year.
On a brand-by-brand basis Chevrolet was of course the largest nameplate by global sales volume. Chevrolet has increasingly been rolled out as GM's main mass market brand in Europe and Asia over the last decade, using vehicles manufactured at the company's GMDAT unit in South Korea, and this has been reflected in the brand's sales growth. This was reflected in an extremely strong accelerated growth figure recorded by the Chevrolet brand, with volumes rising by 21.4% y/y to 4,271,189 units thanks in part to new global models such as the Chevrolet Cruze and a recovery in truck sales in the United States. The company's main European Opel/Vauxhall brand posted modest growth of 2.4% in 2010, with sales rising to 1,236, 221 units. However, this was a solid performance in view of the 5.5% decline that the European market experienced as a result of the ending of scrappage schemes in the region's major market territories. The aforementioned SAIC-GM-Wuling JV was the third best-selling brand in the company's portfolio, ahead of Buick, which has enjoyed a very successful run in the Chinese market, with sales driven by the new Regal, which is based on the Epsillon II platform and is similar in appearance to the European-specification Opel/Vauxhall Insignia. Sixth-placed Cadillac also experienced a strong increase in sales volumes, also a result of heightened interest from China, with volumes rising 40.3% y/y to 180,724 units.
Outlook and Implications
The news that GM sold more vehicles in China than it did in its home market, albeit by its own method of collating sales data, is somewhat momentous and perfectly illustrates the way the trend is moving in the global light-vehicle market. It is the first time that an overseas market has outpaced sales in the domestic market for the company in its entire 102-year history. GM has been on an expansion spree in China which remained the largest vehicle market and producer in the world for the second year running during 2010 and the company has derived outright volume growth of over 500,000 units during the year from growth in the market. "GM took the big risk moving into China with Buick some years ago, but now its global footprint is actually better than even Toyota's," said George Magliano, an economist at IHS Automotive. GM's aggressive expansion strategy is in light of the remarkable growth anticipated from China in the years to come. The Chinese market is likely to grow faster than the U.S. and is expected to improve by between 10% and 15% this year and will remain the largest global market for the foreseeable future (see China: 18 January 2011: Chinese Vehicle Market Grows by One-Third in 2010 on Back of Government Incentives). Additionally, "business is also turning up in America," according to GM. The automaker announced yesterday that it planned to add a third shift at its factory in Flint, Michigan (United States), to manufacture the Chevrolet Silverado and GMC Sierra heavy-duty pick-ups (see United States: 24 January 2011: GM Expected to Add Third Shift to Michigan Plant). "The automaker does not receive the same benefits to its bottom line from a vehicle sale in China as it does from a sale in the United States because its Chinese business is split with joint venture partners. Because of growing competition and expansive manufacturing capacity in China, vehicle transaction prices are falling, and that's likely to squeeze profits," said Magliano. However, GM's fortunes look like they are continuing to recover, albeit with the significant caveat of ongoing macroeconomic uncertainty, especially with regards to the European and U.S. marketplaces.