GM Plans Push for Chevy in China -- WSJ

By Mike Colias 

SHANGHAI -- Chevrolet, General Motors Co.'s biggest brand, is counting on a spate of vehicle rollouts in coming years to end a sales skid in China.

GM's other brands have been on a tear in the world's largest car market, including Buick, which topped 1 million vehicle sales in China last year to rise to second place behind Volkswagen AG's namesake brand. However, Chevy's sales have declined for two consecutive years, a slump executives blame on a vehicle lineup thin on sport-utility vehicles, whose popularity is surging in China.

Until recently, GM had been using older, "legacy" vehicles to fill out much of Chevy's lineup, said Alan Batey, head of the brand globally, referring to what is a common tactic for auto makers to sustain profit margins in emerging markets. He said Chevy was gradually replacing those with the same vehicles it sells in the U.S., which are more refined and have better technology.

"Over the next two or three years, we've got a whole arsenal of products, " Mr. Batey said in an interview on the sidelines of the Shanghai auto show Wednesday. "We're really just getting started now."

The largest U.S. auto maker by sales plans to introduce 20 new or revamped models in China by 2020, including the Equinox, a compact SUV that GM is rolling out in the country for the first time. It has long been one of the auto maker's top sellers in the U.S.

GM's China business generated about $2 billion in equity income from its joint-venture partnerships last year, about 16% of its total pretax profit. In addition to Buick, brands sold under GM's joint ventures in China have performed strongly, including Baojun, a lower-priced marque that the car maker owns along with Shanghai's SAIC Motor Corp. that has sold well in smaller cities and rural areas.

Chevy's rough patch comes as local Chinese brands churn out increasingly refined and competitively priced vehicles, in some cases challenging mainstream foreign brands including Hyundai, Ford and Chevy.

A few years ago, GM executives frequently emphasized the need to increase Chevy's sales globally, with a special focus on China. In 2012, Chevy signed a roughly $600 million, long-term deal with the U.K.'s Manchester United soccer club, citing the team's large following in China.

While Chevy remains GM's largest brand by sales volume -- accounting for 37% of its 10 million vehicle sales world-wide last year -- its performance in China has been overshadowed by Buick's gains in the past few years. Buick's sales in China have risen 46% since 2013; Chevy's slid 16% over that period to about 525,000, less than half of Buick's tally.

Yale Zhang, a Shanghai-based analyst at Auto Foresight, said Chinese consumers increasingly were turning to domestic brands for SUVs, citing huge increases in sales by some of China's biggest domestic auto makers, including Great Wall Motor Co. and SAIC.

Mr. Zhang said Chevy was well-positioned to capitalize on the SUV trend with the Equinox, which has the design and features be a formidable player in a vehicle segment that is among China's largest.

"That one model has the potential to turn around Chevrolet's performance here," he said.

Write to Mike Colias at [e-mail]

(END) Dow Jones Newswires

April 20, 2017 02:47 ET (06:47 GMT)

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