General Motors is primarily engaged in automotive production and marketing and financing and insurance operations. GM designs, manufactures, and markets vehicles worldwide, have its largest operating presence in North America. The core competence of General Motors is innovation. This is the driving force behind its $190 above turnover. General Motors has been utilizing innovation in service ad technology to secure itself a dominant position in the automobile industry, since 1908. The main problems faced by General motors are declining U. S.
automobile market share, high pension costs, rising fuel prices, lack of differentiated products, inability to generate revenues from its core activity (manufacture of cars), over dependence on its financing division and its inefficient use of assets. General Motors can adopt several strategies and tactics to overcome internal weaknesses and external threats. Some of these are: 1. Introducing self managed creative work teams to improve and speed- up product development of new technologies in emerging markets such as China and Europe. 2. Reduce dependence on GMC and focus resources on core products i. e.
cars and SUVs to generate revenues. 3. Cut costs by dropping unsuccessful product lines and introducing cars that accommodate the needs of the car-buying public. 4. Shift major operations to lucrative European and Asian markets in order to avoid high operating costs, including the high healthcare costs imposed by UAW 5. Reduce threat of lower priced products by introducing a flexible product line and trimming the inefficient ones. The changes that are needed to make General Motors more competitive are to change the organizational structure with the Chairman and CEO positions segregated and the elimination of vice chairman positions.
GM should redirect development and marketing costs from gas fueled vehicles to alternative vehicles at a minimum of 50% of overall cost. General Motors should offer a wider range of fuel-efficient mini-cars as there is likely to be an upward trend for these due to the occurrence of traffic congestion worldwide. The company should gain market share in the European and the Asian markets, which are quite promising. General Motors should change public opinion and overall image of company to be perceived as an environmentally friendly, and an auto industry leader in alternative vehicles.
General Motors is primarily engaged in automotive production and marketing and financing and insurance operations. GM designs, manufactures, and markets vehicles worldwide, having its largest operating presence in North America. GM’s finance and insurance operations primarily relate to General Motors Acceptance Corporation (GMAC), a wholly owned subsidiary of GM, which provides a broad range of financial services, including automotive finance and mortgage products and services. CORE COMPETENCE The core competence of General Motors is innovation. This is the driving force behind its $190 above turnover.
General Motors has been utilizing innovation in service ad technology to secure itself a dominant position in the automobile industry, since 1908. In 1911, it conceptualized, engineered and commercialized the self-starter engine for the first time. Then in 1926, its product Cadillac was the pioneer in devising a nationwide service strategy. In 1996 General Motors introduced OnStar satellite technology which allows equipped vehicles to be tracked in case of an emergency or theft and allows the passengers to communicate with OnStar personnel. Other new car concepts include minicars such as Chevy Aveo.
However in the case of hybrid vehicles, General Motors was unable to keep up to the pace of the market demand. PROBLEMS FACING GENERAL MOTORS There are a number of problems facing the company. 1. The share of the U. S. automobile market held by General Motors in 1976 was 47% but this has now declined to 26%. This weakens the company even further as it relies heavily on its sales to this region. More than two thirds of the company sales are made in the U. S. 2. General Motors pension fund obligations and health care obligations appear to threaten the future of the company.
Majority of General Motors’ U. S. employees are members of the United Auto Worker (UAW) Union, which ensures health insurance for its members by entering into contractual agreements with employers. The United Auto Workers’ officers and GM’s senior managers decided decades ago to agree to high pension and health benefits in exchange for reduced increases in wages. Health care benefits are tax-free income for workers. Even retired workers are covered. It seemed like a low-risk deal for GM. Nobody thought about the price effects on health care of Medicare.
The health care market (15% of the U. S. GDP), like all markets, is a giant auction. If bidders get their hands on more money, they will bid up prices. All over America, workers are bidding health care prices. So are retirees. General Motors is therefore required to incur heavy expenditure on health insurance for its U. S. employees. Healthcare costs have increased by double digit in the past decade and now represent approximately $1,500 of the cost of each vehicle produced, there is more health care than steel in a GM vehicle’s price tag .
This is one of the main reasons it lost $1 billion in the first quarter of 2005. Then there are GM’s retirees: Health care for retirees and their families – there are 2. 6 of them for every active worker – is 69 percent of GM’s health costs. For a minicar like Chevy Aveo this is 15% of its sales value ($1,500/$9,995= 15%). In conclusion as medical costs are rising this will have an adverse effect on the profitability of GM i. e. as medical costs ^ the profitability of GM v. 3. Costs of various heads have risen dramatically. These include raw material costs, fuel, healthcare and pension costs.
These have worsened the profitability situation of General Motors. So much so that the company was able to translate its sales to net income only by 1. 45% in the year 2004 (Net income/Sales= $2. 8 billion/$193 billion=1. 45%). 4. The company does not offer competitive, differentiated products anymore. Its most profitable products such as SUVs and trucks are less fuel efficient than other vehicles. As fuel costs are increasingly on the rise, General Motors is likely to lose more customers. 5. General Motors has always been ahead of other industry players by emphasizing on innovation.
However it was unable to come up with a commercially viable hybrid vehicle on a timely basis as its competitors sprung ahead. Therefore General Motors cannot claim the pioneering advantage in this progressively more important product category. 6. The company is constantly making losses in its core business activity. In the first quarter of 2005 there was a loss of over $1 billion. In the second quarter there was again a loss of $286 million. A major proportion of these losses stem from the North American operations of General Motors.
While industry-wide North American vehicle sales grew slightly, GMNA’s vehicle production declined in 2005. Compounding this decline in volumes was the effect of unfavorable product mix, whereby GM had fewer sales of higher margin large trucks and large cars, due to a combination of volatility of consumer demand and the anticipated introduction of new truck models to replace products at the end of their lifecycles. 7. The credit rating of General Motors has declined to junk status. This means that the company will have to pay higher debt costs to its lenders. 8.
GM is thought of as an auto company but its auto division has a small percentage share. About 80% of GM’s profits come from GMAC, its in-house loan company: consumer credit and mortgages. It profited greatly during the mortgage boom. But this source of profits has begun to taper off. It can be said that there is an over dependency on GMAC for profits. 9. There is continued growth in size but not in sales. This means that the asset turnover is quite low and management is unable to make efficient use of assets. TOWS MATRIX FOR GENERAL MOTORS STRENGTHS 1. One of the world’s largest companies. 2.
GM, strong repute home and abroad as one of the leading car manufacturers in the world. 3. Annual sales are larger than the annual gross domestic product (GDP) of many economies. 4. Owns renowned brand names such as Chevrolet, GMC, Cadillac, Buick, Pontiac, Saturn, Hummer, Saab, Daewoo, Opel and Holden. 5. Ahead of other industry players by emphasizing on innovation. 6. OnStar satellite technology which allows equipped vehicles to be tracked in case of an emergency or theft and allows the passengers to communicate with OnStar personnel. 7. Increase in sales $ 186. 73 billion (2002) to $193 billion (2004). 8.
Large-scale production facilities. 9. GM covered its annual pension obligations with investments by offering a $13. 5 billion bond offering. WEAKNESSES 1. Company loss of almost $1. 3 billion in the initial two quarters of 2005. 2. Credit rating downgraded to junk status in the month of May. 3. Sales of highly profitable products such as SUVs and trucks are declining. 4. The new pricing strategy featuring no haggle prices will cause a further deterioration of profit margins. 5. Profitability from SUVs since 2001 till 2005 year end has declined by almost 34%. 6. The business is reliant on profits from its financing business.
10. The company was able to translate its sales to net income only by 1. 45% in the year 2004. 11. General Motors has a very blurred mission. 12. Inability to come up with a commercially viable hybrid vehicle on a timely basis. 13. The share of the U. S. automobile market held in 1976 was 47% but this has now declined to 26%. 14. Current organization structure is quite confusing and therefore the process of accountability for corporate and segmental profitability is of an inferior value. 15. GM has adopted a bureaucratic culture. 16. Some of General Motors’ brands are now obsolete. 17.
Required to incur heavy expenditure on health insurance for its U. S. employees. 18. General Motors pays generous pension benefits to its employees. 19. GM increasing in size (total assets) but not in revenues. 20. Profits stagnant i. e. net income only increased from $ 1. 736 billion (2002) to $ 2. 805 billion (2004) despite having sales of $193 billion. 21. Failure to market cars that are fuel efficient and use other alternate energy sources. 22. Costs of production are high. 23. Product design problems in terms of public acceptance of the new models introduced and high cycle time.
1. Use of alternate energy sources rather than fuel. 2. Rapidly increasing sales of hybrid vehicles. 3. Lucrative European and Chinese market for foreign cars. 4. Demand for more differentiated and lower priced cars. STRENGTHS - OPPORTUNITIES 1. Develop and Produce Multiproduct Line with Many Options, in Different price Classes. (S2,S4,S5,S8,O4) 2. Pursue markets in Europe and China with renowned product line. (S2,S4,S5,S8,O3) 3. Use R&D to adopt alternative fuel technologies in its existing line of SUVs and manufacture state-of-the-art hybrid vehicles. (S5,O1,O2,O4). WEAKNESSES - OPPORTUNITIES 1.
Introduce self managed creative work teams to improve and speed- up product development of new technologies in emerging markets such as China and Europe. ( W14,W15,W17,W18,O3) 2. Reduce dependence on GMC and focus resources on core products i. e. cars and SUVs to generate revenues. (W6,O4) 3. Cut costs by dropping unsuccessful product lines and introducing cars that accommodate the needs of the car-buying public. (W19,W20,W22,W23,O2,O4). 4. Shift major operations to lucrative European and Asian markets in order to avoid high operating costs, including the high healthcare costs imposed by UAW. (W17,W18,W19.
W20,W22,O3) THREATS 1. Rising costs in supply of steel. 2. Rise in oil prices. 3. Rise in healthcare and pension costs. 4. Shift in consumer preferences from Sport utility vehicles and trucks to more fuel efficient vehicles. 5. Stiff competition of more differentiated and lower-priced products from Japanese automakers. STRENGTHS – THREATS: 1. Improve fuel efficiency through fuel injection and develop fuel efficient engines. (S5,S8,T2) 2. Outsource manufacturing the body of cars to reduce costs. (S2,T1) 3. Meet stiff competition with revolutionized technology to design new car concepts such as mini cars with diesel engines.
(S5,S8,T1,T2,T4) WEAKNESSES – THREATS: 1. Reduce threat of lower priced products by introducing a flexible product line and trimming the inefficient ones. (W3,W19,W20,W21,T1,T2,T4,T5). CHANGE REQUIRED TO MAKE GENERAL MOTORS MORE COMPETITIVE HR CHANGES CURRENT HR OF GM: The current organization structure of General Motors is quite confusing. There are several area of responsibility that overlap between different heads and can thus be the cause of inter-departmental conflicts. General Motors presently has concentrated the function of Chairman and the Chief executive officer in a single individual.
This is against the basic principle of corporate governance. Then there is the issue of the vice chairmen. By dividing this authority between two individuals it is likely that there will be problems with the strategic direction of the company as these authority figures may indulge in conflicts in order to gain supremacy over each other. The rest of the positions are then arranged in a haphazard way, not allowing any coordination between related functions. Therefore there is the need to restructure the organization structure in such a way that accountability is ensured. Another pressing issue is that of the U. S.
employees who are entitled to heavy payments under the contracts signed by General Motors and the UAW. Since negotiations that are currently under way between the concerned parties are not likely to result in any significant changes considering the influential position of the UAW, it would be better to think of another way to get rid of such high costs that are pulling General Motors into losses. PROPOSED HR OF GM: In the proposed organization structure of General Motors the positions of the Chairman and the Chief executive officer are segregated in order to ensure adherence to the principles of corporate governance.
The next tier consists of the Chief financial officer, Head of global product development and the general counsel. There are no positions of vice chairman so that the concerned authorities do not steer the organizational strategy towards their own scopes. The next tier consists of the President of GM global operations, President GMAC, Chief information officer, global product planning and GM power train. The President of GM global operations further presides over regional presidents (Asia Pacific, Europe, Latin America, Africa & Middle East and North America).
This structure will ensure that there is no confusion and there is proper allocation of responsibility and hence also accountability. FINANCE CHANGES CURRENT FINANCE Current outlook of GM’s financial health is as following; •GM is saddled with a $1,600-per-vehicle handicap in so-called legacy costs, mostly retiree health and pension benefits. • GM has lost a breathtaking 74% of its market value -- some $43 billion -- since spring of 2000, giving it a valuation of $15 billion. Underinvestment has left it struggling to catch up in technology and design. •GM reached a watershed in its four-decade decline in market share.
After losing two percentage points of share over the past year to log in at 25. 6%, GM has reached the point at which it actually consumes more cash than it brings in making cars, for the first time since the early '90s. GM, once the world's premier auto maker, is now cash-flow-negative. •GM executives doled out $7 billion for capital spending and research and development last year, vs. $15. 3 billion for Toyota. Toyota models average sales of 80,000 units a year in the U. S. , whereas GM squeezes out just 52,000 sales per model on average. And Toyota models stay on the market for an average of three years before their next
redesign, compared with nearly four for GM's cars. GM TOYOTA Capital spending and R & D $7 billion $15. 3 billion Sales per model 52,000/year 80,000/year Market life of models 4 years 3 years •Health-care costs also remain a big issue. Retiree benefits cost GM $500 million in the second quarter and $1 billion so far in 2005. PROPOSED FINANCE •GM could easily trim production by 1 million cars, or 20% of its capacity, and still have enough to serve the market. GM could save $2 billion per year in the long run by buying out 20,000 workers but it would pay a hefty $1. 5 billion in severance costs to do so.
•Reasons for product development being at the top of priorities is that GM has to create a type of Hybrid vehicle that will allow it to keep up with the pace of the competitive environment, but must be a product that stands out from the crowd at the same time. Prime example of their idea for a Hybrid SUV, it fits the GM profile with maintaining the SUV portion, but allows the firm to stay with trend patterns. So the company should finance the R&D department focusing more on the new technology and product development. Redirect development and marketing costs from gas fueled vehicles to alternative vehicles at a minimum of 50% of overall cost.
•By GM focusing on volume sales and high quality they should be able to improve their image and become a car that is as desired as Toyota with a profit margin only slightly less than Toyota’s ultimately resulting in improved financial performance for GM overall. GM’s brand loyalty is weakening do to their lack of response in quality issues and GM’s long new model introduction period. With a stronger brand image GM should be able to stem the tide in market share if they can introduce several hybrid vehicles as soon as possible.
This strategy will keep GM in the game and allow GM time to develop better, more fuel efficient engines that also has the desired horse power that most truck and SUV owners desire. •Liquidation is important to GM because their assets are a lot higher than revenues, and if GM could turn assets into cash then there would be more readily available funds and then GM would not have to depend some much on their U. S. sales, which only include 2/3 of that market and their financing tactic wouldn’t be as much of a risk. Liquidation would clearly help out the financial parts of the organization.
FINANCIAL RATIOS: RATIOS20042003 Profitability ROA0. 3985%0. 543% ROE10%15% Return on Sales1. 44%2% Efficiency Ratios Total Asset Turnover0. 2740. 264 Accounts Payable to Sales14%13% Inventory Turnover Ratio15 times15 times Liquidity Ratios Debt to equity ratio1616 •Profits for GM in their U. S. operations have remained stagnant i. e. net income increased from $1. 736 billion in 2002 to $2. 805 billion in 2004. •General Motors generated 0. 39% and 0. 543% (during 2004 and 2003 respectively) return on the assets that it employed in its operations.
•General Motors generated a 10% percent return on the capital invested by the owners of the company in 2004 which was low by 5% as compared to last year. •General Motors made $1. 44 on every $1. 00 of Sale in 2004 whereas in 2003, it made $2 on every $1. 00 sale which is relatively higher than the industry norm (0. 84%) •The total asset turnover tells that for every $1 in assets General Motors owned during 2004, it sold $0. 274 worth of goods and services. General Motors has not been able to generate substantial sales through the use of its total assets. •In 2004, 14% of General Motors's Sales was funded by its suppliers.
A high percentage may indicate that the business may be using suppliers to help finance operations •General Motors has $16 of Debt and only $1. 00 in Equity to meet this obligation which is extremely high. This indicates General Motors is heavily dependent on debt. •General Motors is able to rotate its inventory in sales 15 times in one fiscal year which is much higher than the industry norm (4. 75 times). When this ratio is low, it may indicate a situation where sales are being lost because a concern is under stocked and/or customers are buying elsewhere. MARKETING CHANGES PRODUC TS AND SERVICES
The current product range of General Motors consists of Chevrolet, GMC, Cadillac, Buick, Pontiac, Saturn, Hummer, Saab, Daewoo, Opel and Holden, etc. These include minicars, SUVs and trucks. The most popular vehicles of General Motors are SUVs and trucks but in the past year their popularity is also on the decline due to the fact that these are not fuel efficient. The sales of Chevy Aveo, a mini-car increased sales by 66% from 2003-2004. This is a plus, but at the same time it is still behind in development of fuel efficient vehicles because competitors have vehicles that are electric and miles per gallon are a lot higher.
The providing of a service has been more of GM’s strength, such as the On-Star Satellite technology that will be available on all makes and models of GM products. This product allows vehicles to be tracked incase emergency and theft situations, as well as communication between passengers and an On-Star employee, trained to handle such situations that may occur when traveling. On-Star technology is very popular, reaching 3 million current subscribers. General Motors should offer a wider range of fuel-efficient mini-cars as there is likely to be an upward trend for these due to the occurrence of traffic congestion worldwide.
It is also proposed that General Motors should either make its SUVs and trucks more fuel-efficient or be ready to face a decline in their demand even further in the future. In that case the company should harvest these products at present as they will not remain profitable in the future. General Motors should outsource its OnStar service as far as the daily technical assistance is concerned. General Motors should retain the product development, manufacturing and installation of OnStar however to maintain the required quality standards.
PRICING The current pricing of General Motors products is high as per consumer perceptions as consumers are shifting to other more affordable brands. These prices can be lowered in two cases. Prices can either be lowered in response to any declining trend in costs (which is not likely to happen in the near future) or by General Motors accepting a lower profit margin (as proposed in the new no haggle pricing strategy). However it is suggested that General Motors should not lower its prices as it is currently planning to do so.
It should instead retain the same price levels as lowering prices might give consumers the wrong impression of deterioration in quality. Besides the company is already in huge losses and lowering profit margins will not help in any way. General Motors should instead offer other more affordable product ranges for those individual that cannot afford the premium priced products. Mini-cars should be affordable for the average person so that these can be afforded by youngsters and there is little reliance on the financing unit for such sales.
PROMOTION General Motors was the first automobile firm to produce an annual corporate responsibility and sustainability report in 1950, which is a great way to show social responsibility for the company. General Motors should publicize this aspect of its operations as the individuals who are shifting to other brands in concern for environmental issues, will no longer view the company’s operations negatively. In addition General Motors should promote its mini-cars which are fuel-efficient as these can be great cash cows for the company.
General Motors should change public opinion and overall image of company to be perceived as an environmentally friendly, and an auto industry leader in alternative vehicles. PLACEMENT Presently General Motors is heavily reliant on its U. S. sales. However sales and profitability in this region are declining. Therefore it is necessary that General Motors accommodate accordingly to this change before it is too late to make any changes. General Motors should gain market share in the European and the Asian markets, which are quite promising. Also the company should introduce its mini-cars in such markets at affordable prices.
One advantage of concentrating towards this region is the fact that costs in these regions are comparatively lower, especially the healthcare costs, which are causing negative profitability. If General Motors finds these markets conducive it can later shift its manufacturing operations here as well. This will allow General Motors to enjoy higher profit margins. References: http://www. businessweek. com/magazine/content/05_19/b3932001_mz001. htm http://en. wikipedia. org/wiki/General_Motors#cite_note-9 http://www. ebstrategy. com/selfservice/human_cap/best_practices_gm. htm http://www.
allbusiness. com/public-administration/administration-human/129828-1. html http://www. creditguru. com/ratios/inr. htm http://www. oppapers. com/topics/general--motors-case/ ANNEXURE THREATS 1. Costs of operating for automobile manufacturers are increasing by alarming proportions. Such cost variables include raw material costs, fuel costs, health care and pension costs. 2. There is a trend of rising fuel prices globally. This means that consumers are looking for other ways to commute that lower their dependence on fuel consumption, hence lowering the demand for automobiles.
OPPORTUNITIES 1. The growing awareness of alternate energy sources has opened new avenues to introduce new car bio-technologies. 2. Because of rising fuel prices, consumers are interested in buying hybrid vehicles, which use both electricity and gasoline. These automobiles have rapidly increased in sales volume over the past few years. 3. China and Europe prove to be promising markets for foreign auto-automakers. WEAKNESSES 1. There was a company loss of over $1 billion in the first quarter of the year 2005 and a loss of $286 million in the second quarter of the year.
2. The credit rating of General Motors downgraded to junk status in the month of May. 3. The sales of highly profitable products such as SUVs and trucks are declining. This is largely due to the fact that these are less fuel efficient than other vehicles. 4. The new pricing strategy of General Motors features no haggle prices, which will cause a further deterioration of profit margins. 5. Profitability from SUVs since 2001 till 2005 year end has declined by almost 34%. 6. The business is reliant on profits from its financing business.
Although the financing business, General Motors acceptance Corporation (GMAC) was established to aid consumers by providing finance to purchase vehicles, its existence as a separate profit center is only for the purpose of ensuring business accountability. It should therefore not be taken as a core business activity and be heavily relied upon for corporate performance evaluation. Rather it should be viewed as a support function. In the year 2004, GMAC contributed to the corporate profits to the extent that its share in total profits was almost 100%, whereas it produced only 16% of sales. 7.
General Motors is unable to translate its sales revenue into net income by any significant proportion. The company was able to translate its sales to net income only by 1. 45% in the year 2004 (Net income/Sales= $2. 8 billion/$193 billion=1. 45%). 8. General Motors has a very blurred mission. It needs to reconstruct its mission statement with increased emphasis on factors such as customers, products & services, markets, technology, concern for employees, concern for public image and philosophy. This is essential as it serves as a tool of motivation for the entire value chain by encouraging commitment and aligning all interests.
9. It was unable to come up with a commercially viable hybrid vehicle on a timely basis as its competitors sprung ahead. 10. The share of the U. S. automobile market held by General Motors in 1976 was 47% but this has now declined to 26%. This weakens the company even further as it relies heavily on its sales to this region. More than two thirds of the company sales are made in the U. S. 11. General Motors needs to recreate its organization structure as the current one is quite confusing and therefore the process of accountability for corporate and segmental profitability is of an inferior value. 12.
Some of General Motors’ brands are now obsolete. In the year 2004 it discontinued the Oldsmobile brand. 13. Majority of General Motors’ U. S. employees are members of the United Auto Worker (UAW) Union, which ensures health insurance for its members by entering into contractual agreements with employers. General Motors is therefore required to incur heavy expenditure on health insurance for its U. S. employees. Healthcare costs have increased by double digit in the past decade and now represent approximately $1,500 of the cost of each vehicle produced. For a minicar like Chevy Aveo this is 15% of its sales value ($1,500/$9,995= 15%).
14. General Motors pays generous pension benefits to its employees. U. S. operations are a major source of such expenses. STRENGTHS 1. General Motors is one of the largest companies in the world. 2. Its annual sales are larger than the annual gross domestic product (GDP) of many economies such as Finland, Ireland and Portugal. 3. General Motors has always been ahead of other industry players by emphasizing on innovation. 4. In 1996 General Motors introduced OnStar satellite technology which allows equipped vehicles to be tracked in case of an emergency or theft and allows the passengers to communicate with OnStar personnel.
GM's China market share grows 35. 2% in 2005 (AP) Updated: 2006-01-05 16:16 General Motors Corp. said Thursday its sales in China soared 35. 2 percent last year to a record 665,390 vehicles, slightly boosting its share of the country's increasingly cutthroat car market. Sales were driven largely by the continuing popularity of the company's Buick brand, led by the Excelle sedan and hatchback. The company sold 105,000 of those two models between January and September, according to the China Auto Industry Association, although GM gave no figures for the entire year.
GM, which is looking to growth in China to make up for its shrinking market share in the U. S. , said sales of the GL8 luxury passenger van also recorded steady growth, while newly introduced Chevrolet and Cadillac models also did well. Nearly all of GM cars sold in China are made domestically. Minivans and small trucks sold under the Wuling brand — made at the GM's joint venture in southwestern China, SAIC-GM-Wuling Automobile Co. — benefited from strong sales in rural China and cities in the relatively poorer interior, it said. That joint venture sold 337,188 units, up 43.
4 percent from 2004. GM's flagship joint venture in Shanghai, Shanghai General Motors Corp. , sold 325,429 vehicles, up 28. 7 percent from the previous year, the company said in a news release. General Motors has opened a second plant in Shanghai last year and added three new Chevrolet models in 2005, the Sail compact car, Epica intermediate sedan and Aveo hatchback. That pushed China sales for the brand past the 100,000 mark for the first time, establishing China as Chevrolet's fourth-largest global market. The sales growth gives the world's largest automaker about 11.
2 percent of the Chinese market, up from 9. 4 percent in 2003. "GM benefited from an unprecedented number of new and upgraded product introductions as well as a growing portfolio of brands," Kevin Wale, president and managing director of the GM China Group, was quoted as saying in the release. New models under the Buick, Chevrolet and Cadillac brands will be introduced this year to keep up with what Wale predicted would be 10 and 15 percent growth in the Chinese vehicle market. "We have no intention of letting up on the accelerator," Wale said. GM gave no figures for profits in its China operations.
But in July-September quarter, GM earned $176 million in Asia while losing US$1. 6 billion in North America. In 2004, GM sold 4. 7 million cars and trucks in the U. S. and 4. 3 million elsewhere. GM's sales figures also suggest an overall market recovery in China, where sales have started to pick up after slumping in the second quarter. But with strong sales growth coming from small, cheaper cars, profits at major automakers are expected to shrink. Heightened competition is also forcing prices down, and GM this week announced a nearly 11 percent price cut on its Buick R