In China, mid-sized car slump bodes ill for GM
Yang Jian is managing editor of Automotive News China.
SHANGHAI -- Although General Motors has maintained overall sales growth in China so far this year, sales of its mid-sized Buick and Chevrolet models have declined sharply. That's a bad sign for a company that has made significant progress building its brands in the world's largest auto market.
Two years ago, thanks to the launch of the redesigned Buick Regal and LaCrosse, Chinese consumers started to view Buick as a premium brand.
Instead of opting for an Audi A4 or A6, buyers often chose a mid-sized Buick for its elegant styling and strong performance.
Then the three major German luxury brands -- Audi, BMW and Mercedes-Benz -- enacted steep price cuts, and Volkswagen AG launched the new Passat and Magotan.
As German competition heated up, Chinese demand for Buick's mid-sized sedans declined.
In the first five months of this year, sales of the LaCrosse plunged 28 percent year-on-year to 36,600 units, and deliveries of the Regal dropped 1 percent to 31,186 units.
GM introduced another mid-sized model, the Chevrolet Malibu, in China in March. But the Malibu has nothing special to set it apart from the sea of mid-sized sedans marketed by international brands so it has failed to impress Chinese consumers.
From March through June, Shanghai GM sold only 12,000 Malibus in China.
Meanwhile, Cadillac's China sales have remained small. Only 14,616 Cadillacs were sold in China in the first half of this year, according to GM.
In sharp contrast to weak demand for their mid-sized cars, Chevrolet and Buick enjoy robust demand for subcompact and compact cars.
Sales of the Buick Excelle, a compact car with a price tag of 80,000 yuan (about $12,650 at current exchange rates), rose 20 percent in the first five months of 2012. And in June, sales of the Buick Excelle XT and GT jumped 59 percent, while Buick's overall sales in China rose only 5 percent.
Sales of the $9,487 Chevrolet New Sail surged 66 percent in June, while overall Chevrolet sales rose by a modest 0.6 percent.
Those two models generate 40 percent of Shanghai GM's China sales -- enough to prop up GM's growth in China, which could be a mixed blessing.
If GM can't find a way to boost sales of its mid-sized Buicks and Cadillacs, its brands will be increasingly associated with inexpensive vehicles.
GM executives can't be too thrilled with that scenario.