According to media reports, General Motors is considering adjusting its strategy in the Chinese market, shifting its focus from mainstream models to luxury models. The company is currently striving for a rebound in the world's largest automotive market, as its sales and profits in China have been declining.
While General Motors still believes it can play a role in the increasingly competitive Chinese market, its CEO Mary Barra stated on February 15th that the company must reverse its downward trend in the Chinese market.
Barra said at a conference hosted by Wolfe Research, "The situation in the Chinese market now is very different from five years ago. We hope to participate in this market in the right way, and I think the market leans more towards high-end and luxury models."
Before making the above remarks, Barra had said in an earnings conference call at the end of January that General Motors would re-evaluate its operations in China, stating that no options were "off the table." General Motors entered the Chinese market in 1997, becoming the second foreign brand to produce cars domestically in China after Volkswagen Group.
During the first two decades in the Chinese market, General Motors achieved rapid growth with its Buick, Cadillac, and Chevrolet brands. As recently as 2018, the company's profits in China reached $2 billion. However, last year, the company's profits in China were only $446 million, a 34% year-on-year decrease. With production and inventory adjustments, the company expects to continue to incur losses in China this quarter.
General Motors' market share in China has also been declining. In 2017, its market share in China reached 14%, but since then, it has dropped by nearly half to 8.4%. In 2023, General Motors' sales in China were lower than its US sales for the first time since 2009.
Michael Dunne, former president of General Motors Indonesia and CEO of consulting firm Dunne Insights, said, "General Motors' sales in China have dropped by 50% from their peak in 2017. Chevrolet and Buick are no longer meaningful to Chinese consumers, and Cadillac has become General Motors' last line of defense in China."
One of the problems General Motors faces in the Chinese market is its lagging behind in electric vehicle development. BloombergNEF predicts that electric vehicles will account for 38% of total new car sales in China this year. Cadillac began production of the Lyriq electric vehicle in November last year and will start production of the smaller Optiq and three-row Vistiq electric vehicles later this year.
Buick has introduced affordable electric models in the Chinese market, and the recently launched Electra E5 crossover and Electra E4 coupe electric vehicles have expanded its product lineup. These two vehicles, powered by General Motors' Ultium battery packs, were launched last summer. Buick also has a third electric vehicle, the compact Velite 6, but like Cadillac, most of its sales come from gasoline-powered models.
In contrast, John Roth, global vice president of Cadillac, said in an interview that the brand is showing signs of improvement. He said that Cadillac began to grow from January this year, and sales in China increased again in February, partly due to the Lyriq model.
Roth said, "We need to do better in the Chinese market, and we need to make excellent plans. I believe we will achieve year-on-year growth this year."
Barra said that General Motors can still make money from the mainstream market in China through its joint ventures.
On November 18, 2002, SAIC-GM-Wuling Automobile Co., Ltd. was established, jointly formed by Shanghai Automotive Industry Corporation, General Motors (China) Company, and Liuzhou Wuling Motors Co., Ltd. The company produces small and ultra-small electric vehicles with starting prices of less than $10,000. General Motors holds a 44% stake in the joint venture, which currently accounts for more than half of General Motors' sales in China.
