General Motors' sales
in China grew 27 percent last year, little more than half the
pace it set in 2003 but outstripping estimates for 2004 growth
for the world's fourth-largest vehicle market.
The world's top auto maker, which is closing on market
leader Volkswagen AG, said on Thursday it expected a "positive"
2005 and planned to unveil more than 10 new or upgraded vehicles
in China.
The country yielded about a fifth of GM's global
earnings in the third quarter, but analysts warn the outlook may
be clouded by the market's stubborn weakness and price wars that
picked up in mid-2004.
Auto sales in China are expected to have grown just
10 to 15 percent in 2004, after almost doubling to some 2 million
units in 2003, hit by government-ordered credit curbs intended
to slow an economy in danger of overheating.
"Price cuts will be the common trend this year,"
said analyst Gu Qing at Haitong Securities. "Sales have reached
a plateau -- there is not going to be the strong growth that was
seen in previous years."
GM sold 492,014 units, up 27.2 percent, while sales
from its Shanghai GM joint venture -- which makes Buick sedans
primarily -- climbed 25.7 percent to 252,869 units in 2004. GM's
2003 sales growth in China was 46 percent.
"Last year, China's vehicle market moved from
a state of unusually high growth to a state of steady and sustained
growth," GM's China chief, Phil Murtaugh, said in a statement.
"We remain confident in the overall prospect of China and
expect 2005 to be another positive year."
Market share rose to about 9.3 percent at the end
of 2004 from 8.5 percent at the end of 2003, it added.
Volkswagen is estimated to have commanded a quarter
of the market in 2004, but that falls to about 13 percent if all
vehicles from trucks to buses are included.
Nationwide sales data for 2004 is expected later
in January.
Volkswagen, which counts China as its largest market
outside Germany, on Tuesday posted a 6 percent drop in sales from
its two China ventures, falling short of even its own scaled down
predictions for the year.
It sold some 160,000 more units than GM in 2004,
but has been in China more than a decade longer and has greater
capacity.
GM is nipping at Volkswagen's heels though, planning
a $3 billion investment with local partners to nearly double capacity
to 1.3 million units over the next two years.
"Despite entering the market later, GM must
now be starting to anticipate overtaking Volkswagen," said
Haitong's Gu.
Global auto makers including Ford Motor Co., Nissan
Motor Co. Ltd. and Toyota Motor Corp. (news - web sites) are investing
over $13 billion in China to triple annual production to about
6 million cars by 2010.
Volkswagen itself aims to hike capacity to around
900,000 in 2006 from 700,000 now. By 2008, it wants to bump that
up to 1.6 million units via a 5.3 billion euro ($7.1 billion)
investment.
But executives and analysts say demand -- wrecked
in part by Beijing's clampdown on easy car loans -- may not begin
to recover until the second half of 2005 at the earliest as customers
look forward to more price cuts and greater ease of imports this
year.
In June, Volkswagen cut prices in China by up to
11.7 percent, a month after GM offered 11 percent discounts.
GM said it could not rule out more price cuts.
"We do not plan to use price as our primary
tool to compete in the market," said GM spokeswoman Daphne
Zheng. "But we will be fully prepared to respond to any major
changes in the marketplace."
|