General Motors' Sales Were Jekyll and Hyde Last Month

By Markets Fool.com


General Motors posted strong sales gains in China last month. Image source: General Motors.

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General Motors wasn't the only automaker facing tough questions last month when its sales in the U.S. market plunged 18%. Its crosstown rival Ford also took some heat, as did the entire industry as it posted its steepest monthly sales decline in six years -- although some of the decline was due to a calendar quirk that inflated May 2015 sales.

But then, shortly after itsmixed and slightly disappointing sales monthin the U.S. market, GM showed a completely different face when it produced a nearly opposite month in China.

May record

One quick way to calm investors after a plunge in U.S. sales last month was to report a great month in China. That's what General Motors did when the automaker and its joint ventures delivered a May record of more than 295,000 vehicles, a whopping 16.9% increase from the prior year's May.

As most of us know, sales of SUVs have been accelerating here in the U.S. as well as in China, but GM had good things to say about its passenger car segment, too.

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"GM vehicle deliveries in China achieved robust growth in May," said GM Executive Vice President and GM China President Matt Tsien in a press release. "While demand for our SUVs, MPVs and luxury vehicles remained strong, we also saw impressive demand for passenger car models such as the Buick Excelle GT."

Brand umbrella

Let's break it down a bit further, zooming in on some of the brand highlights under General Motors' umbrella. Starting with Buick, which continues to sell in high volumes in China: The brand's deliveries were up a staggering 61% year over year to more than 100,000 units in May. Buick SUVs and MPVs continued to sell at a strong pace, topping last May's result by 24%, selling nearly 31,000 units.

GM's Chevrolet Malibu XL. Image source: General Motors.

Chevrolet, which is GM's brand with the highest volume of sales in the U.S., posted a 24% decline in China last month to 38,114 units. Though this is disappointing, there is a glimmer of hope with deliveries of its new flagship sedan, the Malibu XL, as sales jumped 37% from the previous month. It's one of a handful of new Chevrolet models on the cusp of being released onto Chinese roads over the next few months; investors can hope that the rollout of new vehicles will help boost sales of a lagging Chevrolet brand in China.

General Motors' Wuling brand tallied deliveries of more than 104,000 units last month, which was a 5% decline from the prior year's May. Honestly, despite a decline in sales, it wasn't as bad as expected with the ongoing weak demand in the brand's mini-commercial-vehicle business. Another brand surging with the increased demand for SUVs and MPVs was Baojun, which delivered more than 43,000 units in China last month, an impressive 80% jump over the prior year.

For full-year 2015, GM sold more than 3.6 million vehicles in China, and Detroit's automaker remains about 4.3% ahead of that pace through the first five months of 2016, with sales topping 1.5 million units.

General Motors sales in China were good enough to calm some investor anxiety after disappointing sales figures in the U.S., but there are still concerns about China's market overall as competition continues to increase and investors wonder if demand is primarily being fueled by government tax incentives. While the sales figures are nice, investors will want to keep an eye on the company's margins throughout 2016 to better understand if increased pricing competition is weighing on profitability -- so far, so good, which points to another very strong quarterly report next month.

The article General Motors' Sales Were Jekyll and Hyde Last Month originally appeared on Fool.com.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.