General Motors warned that it expects pressure on its China business to persist this year as the world’s biggest auto market suffers a prolonged slump, exacerbated by a lackluster economy and the trade war with the U.S.
GM and its partners sold 3.09 million vehicles in China in 2019, according to a statement Tuesday. That represents a 15 percent decline for a company that was once the top foreign automaker in China.
The company delivered 3.65 million vehicles in China in 2018 and 4.04 million units in 2017.
GM operates a Shanghai-based joint venture with SAIC Motor Corp , in which Buick, Chevrolet and Cadillac vehicles are made. It also has another Liuzhou-based venture, with SAIC and Guangxi Automobile Group, in which they make no-frills minivans and have started to make higher-end vehicles.
Sales of GM's affordable Baojun brand dropped 28 percent in the latest quarter, while sales at mass-market Chevrolet tumbled 20 percent and Buick fell 17 percent, the statement said. But luxury brand Cadillac's sales increased 3.9 percent.
“We expect the market downturn to continue in 2020, and anticipate ongoing headwinds in our China business,” Matt Tsien, Shanghai-based head of GM’s China business, said in the statement.
The U.S. automaker’s sales in China have tumbled even more than the industry. Added strain has come from a consumer backlash to President Donald Trump’s trade policies, a Bloomberg Intelligence report said in November.
The China Association of Automobile Manufacturers has said vehicle sales may drop 2 percent to 25.3 million units in 2020, which would be a third straight year of declines.
China isn’t alone. The global auto industry is sputtering as trade tensions and tariffs raise costs and stifle investment, and as manufacturers reassess their staffing in an era of electrification, autonomous driving and ride-on-demand services.
GM is on track to introduce at least 10 new energy vehicles in China in the four years to 2020, the company said.
Apart from established players such as Volkswagen Group, Mercedes-Benz, and Toyota Motor Corp., GM also needs to compete with local challengers such as BYD Co., Nio Inc. and Guangzhou Xiaopeng Motors Technology Co., known as Xpeng.
On top of that, Tesla Inc. is starting to deliver locally-produced sedans to customers in China.
Reuters contributed to this report.
