GM’s 2010 China Vehicle Sales Climb 29% on Stimulus

Bloomberg Business Week, January 4, 2011

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Jan. 4 (Bloomberg) -- General Motors Co., the biggest overseas automaker in China, boosted sales in the country 29 percent last year as government stimulus policies and rising incomes spurred demand for its Buick and Chevrolet models.

Sales totaled 2.35 million vehicles, Detroit-based GM said today in an e-mailed statement. The growth rate slowed from 2009, when deliveries surged 67 percent to 1.83 million.

The company expects sales this year to grow as much as 15 percent, according to Kevin Wale, president of local operations, as the government ends rural subsidies and tax breaks that helped China became the world’s largest auto market. The automaker plans to add about 12 new models in two years to sustain demand, including its first under a new Chinese brand.

“The expiring of the subsidies will have some impact on the market this year,” said Bill Russo, a Beijing-based senior adviser at Booz & Co. “It’s a tangible impact for GM, but not catastrophic.”

China raised the sales tax on small vehicles to 10 percent from 7.5 percent on Jan. 1 as it ends measures designed to support auto sales. Rural subsidies, first introduced in March 2009, have also ended.

The government said on Dec. 23 it would set a monthly quota of 20,000 new vehicle licenses in Beijing as the city seeks to ease traffic and cut pollution. Non-transferable license plates will be issued through a lottery system.

GM’s car venture with SAIC Motor Corp. boosted sales 42 percent last year to 1.03 million. Its models include Buick Excelle and Regal cars as well as Chevrolet Lova compacts.

Minivan-maker SAIC-GM-Wuling Automotive Co. increased sales 16 percent to 1.23 million vehicles in 2010. Its first sedan, the Baojun 630, is set to go on sale later this year through more than 100 dealers.

--Liza Lin, Tian Ying. Editors: Terje Langeland, Vipin V. Nair.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editors responsible for this story: Kae Inoue at kinoue@bloomberg.net

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