Car Sales In China, The Industry's Salvation, Rise 63% In March

Car sales in China during March rose 63% to 1.26 million according to the China Association of Automobile Manufacturers. US domestic vehicles sales for the same period were 1.07 million. When trucks were included in the Chinese figure, it rose to 1.7 million.

The rapid growth in the Chinese car market underscores its importance to US car companies and their Asian and European rivals. Most measures of the Chinese car business show that VW and its joint venture partners in the country and GM and its local partners vie for the No. 1 spot. The China Daily reported that GM’s March sales in China were up 68% to 230,048. GM’s domestic sales for the period were 188,001.

Ford is well behind GM in China although the No.2. US car company runs about even in US sales with GM most months. Ford sells about 50,000 vehicles in China each month. Its sales in the People’s Republic in the first quarter were up 84% to 153.368.

The pace at which the Chinese car market is expanding is essential to GM’s overall success. Chrysler sells almost no cars in the region and Ford’s sales are modest. The recovery of GM, which received a $50 billion bailout from taxpayers in exchange for a 70% ownership, will rely heavily on whether its can hold its market share in China or whether that share will begin to go to rivals in the region, especially Ford (F), Toyota (TM), and Honda (HMC).

GM paid the Treasury $1 billion of the $6.7 billion in debt its owes late last month. The company’s CEO Ed Whitacre said he expects to continue to aggressively make payments until the government is completely paid back in June. GM then plans an IPO late this year which it believes should allow taxpayers to receive all the funds that GM owes based on the federal government’s equity investment in the firm.

China is vital to GM’s plan. It is one of the few cases where American citizens can legitimately cheer for China’s economic expansion.

Douglas A. McIntyre