How General Motors Is Beating Ford in China

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General Motors said that its sales in China rose 7.8% in February, outpacing the overall market, despite fewer selling days because of the timing of the Lunar New Year.

Year to date, GM's sales in China are up 12%, outpacing most global rivals' year-over-year gains -- and far outpacing a dramatic sales decline for Ford Motor Company.

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How GM is faring against key global rivals in China

Evaluating monthly sales results from China in the first two months of the year requires a little local knowledge. Specifically, we need know that the Chinese New Year is a lunar holiday. It sometimes falls in January, and sometimes in February.

That's important because businesses (like car dealers) generally close for several days around the holiday. When the holiday week falls in January one year and February the next, monthly sales results get confusing.

The best way to cut through that confusion is to evaluate results from the first two months of the year combined. When we do that, we see that GM has kicked off 2018 with some nice sales growth, outpacing its big-name global mass-market rivals.

Automaker Year-to-date sales Change vs. 2017
General Motors (NYSE: GM) 633,706 12%
Volkswagen (VW brand only) 486,100 10.2%
Nissan 213,172 9.7%
Toyota 203,400 10.8%
Honda 203,239 3.9%
Ford Motor Company (NYSE: F) 123,473 (23%)
Overall 3,931,700 2.1%

It's hard to miss that the chart has one big outlier: Ford. The Blue Oval's sales in China have been falling sharply for months, but the decline seems to have accelerated in 2018. Ford is working on a turnaround plan that will bring new models and better distribution to its China effort, but the problems will take time to solve -- and that gives rivals like GM an opportunity to gain ground.

That's exactly what GM has been doing.

What's driving GM's sales boom

GM's recent success in China has been driven by a few different things:

  • SUVs -- particularly its nearly all-new lineup of crossover SUVs. GM's crossovers have done very well in China in recent months, though sales of the Chevrolet Equinox were down in February.
  • The affordable China-only Baojun brand. The smash-hit compact Baojun 510 crossover is still selling in huge numbers, with over 32,000 units sold last month despite the holiday. Sales of the newer 310 hatchback topped 18,000 in February, driven by big demand for the new wagon variant.
  • Cadillac -- GM's old luxury brand has been struggling a bit in the U.S., but sales are booming in China: Year to date, they're up 37%, on strong demand for the XT5 crossover and the XTS, CT6, and extended-wheelbase ATS-L sedans.

It's almost easier to list the things that aren't working for GM in China right now. The big one is Wuling, a brand that for years sold small, inexpensive commercial vans. The market for such vans has shrunk significantly as China's building boom has trailed off. Baojun has responded by revamping its products as inexpensive minivans, with windows and passenger seats, under the Hong Guang sub-brand.

Wuling's sales are still strong, with almost 200,000 sold year to date -- but they're down almost 15% from a year ago.

Coming soon: More new products for China's fast-paced market

The sheer number of companies selling vehicles in China means products become stale more quickly than they do elsewhere. GM has responded with a steady stream of strong new products, and more are on the way. GM has said that it will launch 15 new or refreshed products in China this year, about half of which will be SUVs or minivans.

At least one has the potential to be a big hit: The upcoming new Cadillac XT4, a compact luxury crossover that is expected to arrive at dealers in China (and the U.S.) in the second half of the year. Given the strong sales of the XT5 since its launch, the new one-size-down Cadillac is likely to find a lot of eager buyers -- and help keep GM's growth streak going.

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