General Motors' March Sales Surge in China but Can't Offset a Slow Start

By Daniel Miller Markets Fool.com

One of General Motors' (NYSE: GM) smartest moves was getting into China's automotive market before most of its global competitors. Fiat Chrysler Automobiles has struggled to get things going in the region, and GM outsells its crosstown rival, Ford Motor Company, by roughly three times in China. However, this year had more question marks than in years past, and it also had a slower start thanks to a diminished tax incentive. The good news: GM's March sales data shows a nice uptick in demand. Here are the highlights.

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By the numbers

General Motors delivered a March record of 345,448 vehicles, which was a strong 16% gain over the prior year. Not only was it a March record, it was GM's largest year-over-year sales gain since last August. The driving force behind those gains was predictable: SUVs and MPVs, which soared 45% and 23%, respectively.

This could be a trend with staying power, too, because GM has focused not only on launching more SUVs and MPVs, but on expanding its value-oriented Baojun brand, which has been a runaway sales success.

"SUVs, MPVs and luxury vehicles will help us further tap into the market's growth potential," said GM Executive Vice President and GM China President Matt Tsien, in a press release. "We will continue to expand and upgrade our offerings across segments. Many of our new models will be on display at this month's Auto Shanghai 2017."

Brand highlights

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The Baojun brand was GM's biggest winner in March, with sales skyrocketing 81% compared to the prior year, to 81,353 units. Part of that huge gain was due to the Baojun 510 small SUV, which recorded an impressive 16,443 units sold during its first full month on the market. Another huge winner was Baojun's 730 MPV, which sold more than 30,000 units in March, a 38% gain compared to the prior year.

Image source: General Motors.

Buick has also sold incredibly well in China and recorded a 21% gain in sales compared to the prior year, up to 88,519 units sold. For context, GM sold more than four times the number of Buicks in China than it did in the U.S. last month (20,957 units). In fact, the Envision recorded 16,000 units sold during March, which almost matched all of Buick's March U.S. sales.

Cadillac's March sales also performed well in terms of year-over-year gains, even if volume wasn't eye-popping compared to that of GM's mainstream brands. Cadillac recorded a 63% increase in sales and topped 12,300 units sold during March. The XT5 SUV continues to be the brand's sales champion and generated more than a third of Cadillac's total sales.

China is going to continue to be a critical story for GM, and other major automakers, as management looks for ways to offset a plateauing U.S. market. GM International Operations, which includes and is largely driven by China, was GM's second-most profitable entity during the fourth quarter, behind only North America. Despite a 16% surge during March, GM's sales during the first quarter declined 5.5%thanks to a slower-than-anticipated start to 2017.

We'll find out if a surge in SUV and MPV deliveries, which are more profitable, can offset a slight decline in total sales volume during the first quarterwhen GM delivers its earnings presentation on April 28 -- because improving China's profitability will be a critical factor in GM's growth story.

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Daniel Miller owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.