China sales crucial to GM success
"Wouldn't you really rather have a Buick?" was the longtime advertising slogan of that U.S. brand.
These days many motorists in China these days really would. During my visit to Beijing earlier this year I was impressed by the number of GM-made Buicks on its crowded streets.
Faster growth in emerging markets, especially Asia and Latin America, is the key to the long-term prospects of the world's largest automaker by sales. More than 1 million GM vehicles were sold in China last year and its sales there are expected to eventually eclipse those in the U.S.
"The company that gets China right is going to be the dominant player for the next 25 years," GM Chief Executive Rick Wagoner predicted earlier this year.
In the present, however, GM is bleeding red ink and losing North American market share, while European sales are also slipping. It lost $3.25 billion in the first quarter and closed four U.S. pickup truck and sport-utility vehicle factories as it shifted to smaller vehicles consuming less gasoline.
A three-month strike at a major supplier was costly, and May sales were down 28 percent compared with a year ago. Another problem is that GM holds a 49 percent stake in financier GMAC LLC, recently downgraded further into junk status.
The automaker's shares (GM) are down 54 percent this year following a 16 percent decline last year. The 64 percent rise of 2006 was driven by SUV sales.
Some positives: GM's all-electric Volt vehicle and a new small car more fuel-efficient than Chevrolet Cobalt will debut in late 2010. Cost savings from a lower wage structure also go into effect in 2010.
The Chevrolet Malibu is a hit, while Cadillac and Buick receive high marks for quality from experts. In a massive reduction, 19,000 hourly GM workers in the U.S. accepted buyout offers.
The consensus rating of GM stock by Wall Street analysts is "hold," representing divergent opinions, according to Thomson Financial.
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