Sunday, October 27, 2013

The World's Biggest Auto Market Is Gearing Up For General Motor's Onslaught

By Sarfaraz A. Khan and Mehreen Tanveer

General Motors is planning for a major push in the Chinese market with an onslaught of SUVs and Cadillacs n the back of a massive $11 billion investment plan through 2016. 

General Motors (NYSE:GM) is one of the leading global vehicle manufacturers that not only dominates North America but also the emerging markets, particularly the BRIC nations where it is one of the leading foreign players with significant market share. In its previous quarterly results, GM earned more than 60% of its revenues from North America while the rest came from Europe, South America and other international operations (including China).

(Figure 1)

August Growth: GM and China

In the previous month (August), GM reported its best monthly sales numbers since the global financial crisis of 2008. On an year-over-year basis, total vehicle sales in the U.S rose by 14.7% to 275,847 vehicles while retail sales rose 22.1% to 220,958 vehicles. The sales of crossover, full-size pickups and large SUVs rose 34%, 15% and 29% respectively. Moreover, new product launches and modifications after 2010 of Chevrolet Volt, Chevrolet Spark, Chevrolet Sonic, Cadillac XTS, and Buick Verano have strengthened the company's position.

Meanwhile, China has continued its recovery from the global financial crisis which is translating into increasing demand for vehicles. In August 2013, sale of non-commercial vehicles rose by 11% to 1.35 million as compared to 1.22 million last year, according to data provided by China Association of Automobile Manufacturers.

The 11% growth shows a record increase from 10.5% in July and 9.3% in June 2013. The increasing levels of income and low car ownership rates have propelled the demand of vehicles in the country's … read full article with images at Seeking Alpha.