SHANGHAI -- 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.
GM, which is closing on market leader Volkswagen AG, said on Thursday that 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.
Car sales in China are expected to have grown just 10 percent 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 this month.
VW, 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 VW'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 automakers including Ford Motor Co., Nissan Motor Co. Ltd. and Toyota Motor Corp. are investing more than $13 billion in China to triple annual production to about 6 million cars by 2010.
VW itself aims to boost capacity to about 900,000 in 2006 from 700,000 now. By 2008, it wants to bump that up to 1.6 million units via a $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, VW 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."