GM looks to China as China looks west
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GM on Monday said that 2009 sales in China by it and its partners grew 67% to a record 1.8 million units, an impressive total even in a market notable for its across-the-board growth. Toyota Motor Corp. (NYSE:TM) by comparison as recently as late November expected to grow its own China sales in 2009 by 17% to 700,000 vehicles.
GM said it expects 2010 to be “even stronger” for its Chinese business, though growth might fail to match 2009′s rate. The company is betting big on China and other Asian markets, in 2009 opening a science lab, vehicle safety lab and large vehicle proving ground while announcing it and partner Shanghai Automotive Industries Corp. would also collaborate on sales in India. GM and other Western automakers are hoping that emerging markets can offset lagging sales and growing competition in its home markets.
But GM and the automakers are not the only ones looking to China: Dealers are reportedly eager to see Chinese-built models hitting their U.S. showrooms. Automotive News says Volvo dealers are interested in selling low-cost cars made by Zhejiang Geely Holding Group if that company, as expected, completes its purchase of Volvo from Ford Motor Co. (NYSE:F).
Geelys will not be arriving in Volvo showrooms overnight: The company does not currently meet U.S. quality and safety standards, and even borrowing some of Volvo’s expertise is not expected to match those standards for at least five years. But it seems certain Chinese-built cars are coming eventually, and at prices that are likely to send U.S. automakers currently crowing about reaching cost-parity with the Japanese back to the drawing board seeking fresh cuts.
So it is with the modern global auto business, where Chinese companies are targeting Western markets and U.S. makers are hoping to offset the expected hit by growing in the competition’s backyard. – Lou Whiteman
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