GM’s China Strategy Is Paying Off in a Big Way

Source: Getty Images
Source: Getty Images

General Motors has definitely had a rough year, but some recent victories are giving the company’s fans and investors something to get excited about.

GM’s sales in China hit their fastest pace in the past seven months during September. In a press release, General Motors says the company Chinese arm had its second-best month for the whole year, and saw its annual sales rise 15.2 percent on a yearly basis, to a total overall number of 319,936 units. That’s also an all-time high for GM’s September sales.

The company has a number of joint-ventures in China, in addition to its own brands sales. Altogether, GM and its partners passed the 20 million mark in terms of vehicles sold last month. GM alone sold 3.2 million vehicles in China last year, but setbacks this year hampered expectations for the company eclipsing that mark in 2014.

The recent sales spike does rewrite expectations, at least a bit, as GM has been able to post very impressive sales gains for all of its brands. Buick sales in China were up 17.8 percent on an annual basis, and Chevrolet sales were even higher, up 19.3 percent. The Chevy Cruze led the charge for the Chevy nameplate, with more than 24,000 units sold. Also, demand for the Malibu shot up 34 percent, as dealers sold nearly 12,000 units.

Those figures pale in comparison to the month that Cadillac had, however. For GM’s luxury brand, sales rocketed up 51.4 percent from September 2013. Now, less than 7,000 total Cadillac models were sold, headlined by the XTS and SRX, but that is still a significant jump year-over-year.

So far for the year, GM on its own has managed to sell more than 2.5 million vehicles. That represents an 11.6 percent increase over last year, and has analysts and investors buzzing about the potential that China has as a market going forward.

What’s the secret to GM’s victory in China? Careful strategic planning, it would appear. General Motors views China as its biggest market — and the area of the globe that has the most potential going forward. Although its been tough for all of the big American auto makers to gain significant market share in Asia, GM was the first to sell more than 2 million vehicles in a year back in 2010. In just three years, the company was able to bring that number above 3 million, and if GM can maintain momentum, there’s no telling how far things could go.

The combination of new technology and a strong push towards the Cadillac brand has been a big catalyst behind GM’s recent success, and was outlined by CEO Mary Barra at a recent investor’s meeting.

“We have the resources. We have the technical talent. We have the global footprint. It’s about execution,” Barra said, according to Forbes. “We understand we have to earn customers for life,” she said. “Every chance to connect with customers is an opportunity to build a stronger relationship.”

By beating its competitors to the punch in the Chinese market, GM looks to be solidifying its customer base for the years to come. If the company is successful in earning customers for life, then the billions of people who live in China could propel the company to new heights, despite the recent troubles it has experienced.

Also helping GM’s chances is the fact that the company plans on investing more than $14 billion by 2018 in the Chinese market, which will help build a number of new assembly plants. The company’s goals by that time are to sell 5 million vehicles per year.

If recent trends hold up, it looks like GM shouldn’t have a problem hitting that threshold.