GM Stars In China

General Motors (GM) may be struggling to keep its unit sales and market share in the US, but it is booming in China. Perhaps the company should move from Detroit to Shanghai.

Sales of GM cars direct and through joint venture partners rose 25% in the first quarter to almost 292,000 vehicles. That makes GM No.1 in the China car market. While it is still No.1 in the US, the market here is not growing. It is simply a battle for share, mostly with Toyota (TM).

Buick and Chevy brands sold especially well in the Chinese market, showing the Buick’s brand may be doing poorly in the US, but has traction elsewhere.

It is hard to say whether there are any lessons for GM’s North American car operations when they look to the company’s success in China. The labor costs are low, and labor costs are still the big boat anchor for GM in the US. But, there is an asset allocation issue. GM should invest what it can where there is growth, even if it means lowering the blood supply to operations in the US and Europe. Toyota may be doing well in North America, but a market that is stagnant only has so much value.

Douglas A. McIntyre