GM’s Future Is In China

With America’s automobile industry fighting for survival as it depends on government lifelines, China’s automobile industry is thriving. It wasn’t long ago that China produced only 5000 cars a year. Today it is the world’s largest car market. No one expected China to be in first place in the global auto market race until 2020. The pundits and experts were wrong again. China’s stimulus package with more than $733 million in tax breaks for rural buyers of small cars drove sales through the Middle Kingdom’s sky. Let’s not forget China also allocated $220 million to fund and upgrade new green automotive technologies, especially in alternative-energy vehicles that are the wave of the future. To help offset the high cost of buying clean-energy vehicles, subsidies of nearly $8,800 are being offered to local government agencies and taxi fleets in 13 cities for each hybrid vehicle purchased.

Beijing’s 2009 car sales target is 10 million units, an increase of 10 percent from 2008, and a figure that will cement its position as number one with an estimated 1 million more unit sales than America. China’s dominant role will allow it, rather than Detroit and Washington to dictate world fuel consumption and emission standards, including fuel efficient Hummers. The deal needs to be approved by both Washington and Beijing. The U.S. Department of the Treasury must give their nod to the deal, as must the Committee on Foreign Investment in the U.S. and Beijing’s policy for a “green and environment-friendly vehicle industry” poses a hurdle for the buyer Tengzhong Heavy Industrial Machinery.

The five top-selling brands in China are Volkswagen, Hyundai, Toyota, Honda and Nissan, in that order. No American car there.

The two Chinese joint ventures of bankrupt General Motors reported record monthly sales for May 2009, the month before GM filed for bankruptcy. Shanghai GM, said vehicle sales jumped more than 50 percent from a year earlier to 56,011 cars, buoyed by the top selling Buick brands. GM’s minivan joint venture sold 100, 258 cars, the first time that a Chinese automaker sold more than 100,000 cars in one month. GM’s total vehicle sales in China surged 75 percent from a year earlier to more than 156,000 in a month. This was in stark contrast to its performance at home where sales plunged 50 percent in the first quarter of 2009.

The carmaker, which sold its first car in China in 1920, sold 1.09 million vehicles in China in 2008, and said it expected to double annual sales in the country to more than 2 million cars over the next five years.