GM defying China slowdown may reclaim sales lead from Toyota

Apr 19, 2011: General Motors Co. (GM) and Volkswagen AG (VOW) expect to boost vehicle sales in China faster than the nation's economic growth rate, defying government policies to curb sales and threatening Toyota Motor Corp. (7203)'s standing as the world's largest carmaker. GM, the largest U.S. car company, plans to double sales in China to 5 million vehicles by 2015, the Detroit-based company said at this week's Shanghai auto show. Germany's Volkswagen, the biggest maker of passenger cars in China, said it may outpace industrywide sales growth of as much as 12 percent. Carmakers are boosting sales and production plans even after the government ended industry subsidies and as cities including Shanghai and Beijing restrict new car licenses to fight pollution and ease traffic. GM's sales target may enable it to retake the global sales title it lost to Toyota in 2008. "You get used to not worrying about variations around the trend line," Kevin Wale, GM's China president said yesterday. "In the past ten years China's growth rate has only been below 10 percent in one year. The underlying trend is very strong." GM's prediction of 5 million sales compares with Toyota's goal of doubling deliveries in the nation by 2015 from 846,000 vehicles last year. The Japanese company sold 8.42 million vehicles globally last year, compared with GM's 8.39 million. "If the market doesn't have any major setbacks, GM's forecast isn't unrealistic," said Ashvin Chotai, managing director of consultant Intelligence Asia Automotive. - Bloomberg "We've been wrong in the past with conservative forecasts." China is already GM's biggest market, with 2.35 million sales last year, compared with 2.21 million in its home market. The U.S. carmaker aims for market share of over 14 percent in China by 2015, Wale said today in an interview. Industrywide auto sales in the nation may grow as much as 12 percent a year over the medium term, Karl-Thomas Neumann, chief executive officer for China at Wolfsburg-based Volkswagen, said yesterday. Volkswagen's deliveries may increase at a faster rate, he said. "We're bracing for more rather than less," Neumann said. The company sold 1.92 million vehicles in China and has said it aims to be the world's biggest carmaker by 2018, surpassing Toyota and GM. VW sold 7.14 million vehicles globally in 2010. The auto company car-sales estimates compare with economic growth of 10.3 percent in China last year, a rate that may ease to 9.6 percent this year, according to the Asian Development Bank. The world's second-largest economy expanded by a more- than-estimated 9.7 percent in the first quarter of this year, even after the government raised interest rates to rein in inflation. China overtook the U.S. as the world's largest auto market in 2009. The growth slowed to 32 percent last year as the government began phasing out tax breaks and subsidies for car buyers. The market may expand by less than a previous forecast of 10 to 15 percent, Dong Yang, vice chairman of the China Association of Automobile Manufacturers, said this month. Carmakers are unworried about lower growth because China, the world's most populous nation, still dwarfs all other markets and two-thirds of Chinese customers are first-time car buyers, said Joe Hinrichs, head of Asia Pacific and African operations at Ford Motor Co. (F)