China: GM sales rose 20 per cent in November

Auto sales are slowing in China. Smaller automakers are struggling for survival and analysts expect that there will be many mergers. Large foreign automakers such as GM and Toyota hope that some customers of these failing companies will switch to their brands.


GM has already established itself as the largest foreign automaker in China. GM sales in November rose 20 per cent on lower prices. In contrast the Chinese company Chery saw a sales drop of a whopping 30 per cent.


The China Association of Automobile Manufacturers records sales for an astonishing 70 different automakers. As sales decline some of these companies are bound to fail or be merged with larger firms.


Fifteen of the largest firms account for almost 90 per cent of the total production. Ten companies recorded zero sales for the entire year! The Chinese market may expand only 3 per cent this year as compared to 32 per cent last year.


For its part the government is encouraging smaller companies to merge with larger ones. However local governments where small companies are located resist the trend since it means jobs may be lost in their areas.


The auto industry in China has room to grow. The auto ownership rate in China is only 60 per thousand people less than half the global average. Many foreign countries intend to expand production including Volkswagen. But GM is leader of the foreign pack so far. For more see this article.