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Strategic Partnerships Help GM Endure Chinese Sales Declines

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Cadillac XT5 mild hybrid China

As other automakers struggle in the face of declining Chinese sales, GM is managing to turn a profit

After years of consecutive growth, automotive sales in China are starting to slide. Nevertheless, some automakers are handling this downturn with more success than their peers.

Among those more successful car manufacturers is General Motors.

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That’s not to say that GM won’t be affected by the general sales decline affecting the Chinese automotive market. Indeed, GM’s Chinese sales were down by 15 percent during the third quarter. Sales were notably on the decline in many of the nation’s smaller cities.

However, the Cadillac brand was able to emerge with sales gains during this same period. In fact, during the year’s third quarter, Cadillac sales grew 20 percent in China.

GM is currently projected to make approximately $2 billion in the region. That makes China one of the company’s most lucrative markets at the moment.

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GM owes much of its success in the Chinese region to its partnership with the Shanghai Automotive Industry Corporation. Foreign automakers must partner with local automakers in China if they want to sell products there.

“GM just has a stronger alliance,” explains Stephanie Brinley IHS Markit automotive analyst. “Their JV partner has really worked out really well for them. Both Ford and [Fiat Chrysler Automotive] have struggled to get partners.”

At the end of the November sales month, Chinese automotive sales were down by 14 percent. While projections still estimate a total of 28 million vehicles will be sold in China by the end of 2018, the outlook for 2019 isn’t looking as optimistic. As China is currently the largest market for GM, it will need to maintain its strong partnerships in order to find continued success in the Chinese region.

News Source: CNBC