Share price of General Motors Company (GM) increased 2.8% to $35.84 on Jan 7, 2015 after the automaker and its joint ventures in China reported a 12% year-over-year increase in sales in the nation in 2014, taking the figure to 3,539,970 vehicles. The improved performance was driven by overall better performance in the Chinese auto market along with rising demand in the luxury, SUV and MPV segments.
Domestic sales of Shanghai GM rose 13.1% to 1,710,025 vehicles in 2014 while that at SAIC-GM-Wuling stood at 1,787,931 vehicles, up 12.8% year over year. However, FAW-GM sales declined 29.4% to 41,702 vehicles in China during the year.
General Motors offers a wide range of vehicles – from passenger to commercial – and varied brands in China. The different brands are Baojun, Buick, Cadillac, Chevrolet, Jiefang, Opel and Wuling.
The Buick brand’s sales in China improved 13.5% to 919,518 units in 2014. The upside was driven by an increase in the sale of the original Excelle to 293,098 units and the combined sales of Excelle XT and GT, which scaled up 20.6% to 246,305 units. Sales of the Regal and Encore stood at 111,245 units and 82,346 units, respectively. General Motors sold 19,683 units of the Envision SUV, which was launched in Aug 2014.
Sales of Chevrolet improved 10%, bringing the number to 717,007 units. The brand benefited from the Cruze sales of 265,993 units, up 7.7% year over year. Sales of the Sail family were 203,208 units. Sales of the Malibu increased 25.4% to 125,547 units.
Sales of the Cadillac luxury vehicle brand witnessed a 47% rise to 73,500 units in 2014. The upside was driven by higher sales of the ATS and XTS sedans. Sales volume of the ATS-L and ATS was 13,276 units, while the sales of the XTS sedan went up 59% year over year to 31,960 units. The automaker also sold 27,484 units of the SRX.
Sales of Wuling in China went up 8.4% to 1,608,571 units in 2014. Meanwhile, sales of Baojun soared 78.5% to 179,360 units.
General Motors and its joint ventures in China also reported solid performance in December with a 31.9% year-over-year increase in sales to 357,375 vehicles in the nation in the month. Domestic sales of Shanghai GM rose 51.8% to 191,181 vehicles in Dec 2014 while that at SAIC-GM-Wuling stood at 164,258 vehicles, up 18.9% year over year. However, FAW-GM sales declined 70.6% to 1,936 vehicles in China during the month.
General Motors focuses on emerging markets to recoup its global sales by increasing capacity investment to meet the growing demand. In 2014, the automaker, along with its Chinese joint ventures, expanded the lineup by launching many new and refreshed models in China, such as the Buick Envision premium midsize SUV, Chevrolet Trax urban SUV and Sail 3 family car, Cadillac ATS-L luxury sport sedan, and Baojun 730 family vehicle.
General Motors also expanded in China during the year. SAIC-GM-Wuling opened a new research and development center in Liuzhou, Guangxi. This center will help in the development of new vehicles in China. The automaker also opened a new manufacturing unit in Chongqing and signed an agreement for the second phase of production at the facility.
General Motors – a Zacks Rank #3 (Hold) stock – is a leading global automotive company. It has ten joint ventures and two wholly owned foreign enterprises, with more than 58,000 employees in China. By the end of 2014, the company had more than 4,530 dealerships in China. The automaker expects industry demand in China to increase this year as well and hence, it will continue to expand its lineup of vehicles and services.
Investors interested in the auto industry could consider better-ranked stocks like PACCAR Inc. (PCAR), Magna International Inc. (MGA) and Dana Holding Corporation (DAN), all carrying a Zacks Rank #2 (Buy).
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