China could save a tarnished GM brand
(MSNBC)Updated: 2006-12-21 09:42 When General Motors unveiled its new Buick Enclave crossover SUV to the media in Pasadena, Carlif, last month, it did so with the help of one of the biggest American sports stars.
Golfer Tiger Woods made all the right noises about the new
luxury vehicle at the Los Angeles Auto Show, calling it "stylish" and "elegant."
But the future of GM's 103-year-old brand may hinge not on the face of an iconic
sportsman but because of China, which this year will pass Japan as the world's
second-largest vehicle market after the United States.
This year, the Buick brand looks set to sell more cars in that country than in the United States, according to Automotive News.
The industry publication calculates that Buick sold 206,582 vehicles in the United States in the first 10 months of this year, down 15.4 percent from the same period of 2005. During the same period, Buick sold 218,603 vehicles in China, an increase of 27.4 percent.
Why the Chinese interest in Buick? While it has seen its status fade here in the United States, the longstanding American brand has never lost its reputation in China. And GM has managed to build on that status, selling vehicles under four major brands — Buick, Chevrolet, Cadillac and Saab — through Shanghai General Motors, a joint venture between GM and Shanghai Automotive Industry.
The Sino-US joint venture sells Buicks such as the LaCrosse, the Excelle and the GL8 to Chinese consumers, and it has overtaken German rival Volkswagen AG to become the top automaker in China in 2006, where it has 13 percent of the market. China is now GM's biggest market after the United States.
The growth comes as GM focuses intently on the growing Chinese market, investing US$3 billion over four years ending in 2007, building a network of dealerships and factories.
The thinking is that as GM works to revive its flagging business, which posted a worldwide loss of US$10.6 billion for 2005, the booming Chinese economy is a significant new source of revenue that can provide the company with the sort of strong growth that isn't found in the United States or other Western markets.
Automotive analysts have long said that big US automakers like GM have too
many brands to support. Two years ago, GM Vice Chairman Bob Lutz unforgettably
described Buick and its sister brand Pontiac as "damaged," triggering
speculation that they would soon be killed off.
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