Wally Edgar Chevrolet-Detroit Chevrolet Dealers GM, VW defy China slowdown; threaten Toyota lead.

April 20, 2011 - PRLog -- SHANGHAI -- General Motors Co. and Volkswagen AG expect to boost vehicle sales in China faster than the nation's economic growth rate, defying government policies to curb sales and threatening Toyota Motor Corp.'s standing as the world's largest carmaker.
GM, the largest U.S. car company, plans to double sales in China to 5 million vehicles by 2015, the Detroit-based company said at this week's Shanghai auto show. Toyota outsold GM 8.42 million to 7.56 million in 2010 while VW was third with a volume of 7.14 million vehicles.

Carmakers are boosting sales and production plans even after the government ended industry subsidies and as cities including Shanghai and Beijing restrict new car licenses to fight pollution and ease traffic.
While VW's stated goal is to be the world's largest automaker by 2018, GM's sales target may enable it to retake the global sales title it lost to Toyota in 2008.
"You get used to not worrying about variations around the trend line," Kevin Wale, GM's China president said Monday. "In the past 10 years, China's growth rate has only been below 10 percent in one year. The underlying trend is very strong."
GM's prediction of 5 million sales compares with Toyota's goal of doubling deliveries in the nation by 2015 from 846,000 vehicles last year.

Realistic forecast
"If the market doesn't have any major setbacks, GM's forecast isn't unrealistic," said Ashvin Chotai, managing director of consultant Intelligence Asia Automotive. "We've been wrong in the past with conservative forecasts."
China is already GM's biggest market, with 2.35 million sales last year, compared with 2.21 million in its home market. The U.S. carmaker aims for market share of over 14 percent in China by 2015, Wale said Tuesday in an interview.

China GDP growth
The auto company car-sales estimates compare with economic growth of 10.3 percent in China last year, a rate that may ease to 9.6 percent this year, according to the Asian Development Bank.
China overtook the United States as the world's largest auto market in 2009. The growth slowed to 32 percent last year as the government began phasing out tax breaks and subsidies for car buyers.
The market may expand by less than a previous forecast of 10 percent to 15 percent, Dong Yang, vice chairman of the China Association of Automobile Manufacturers, said this month. Carmakers are unworried about lower growth because China, the world's most populous nation, still dwarfs all other markets and two-thirds of Chinese customers are first-time car buyers, said Joe Hinrichs, head of Asia Pacific and African operations at Ford Motor Co.

Catching Toyota
"A market as big as this one, even 5 to 10 percent growth is very significant," said Hinrichs. "I'd take 10 percent growth forever," he said.
GM and VW's growth plans may help both automakers catch up with Toyota whose growth has lagged behind rivals in China.

Chinese car companies
Chinese car companies are also planning expansion. SAIC Motor Corp., GM and VW's local partner, is aiming for 6 million deliveries by 2015, compared with 3.6 million last year, it said Tuesday.
SAIC and Great Wall Motor Co. also plan to raise sales outside China. Shanghai-based SAIC said it's aiming to sell 800,000 cars a year outside China by 2015. While automakers' growth plans are realistic, government measures to limit car sales in cities may become a concern, Chotai said. China will start curbing vehicle ownership in cities with more than 10 million people from 2011 to 2015 to ease congestion, China's Economic Observer reported March 31.
Beijing's government said Dec. 23 it would set a monthly quota of 20,000 new vehicle licenses in the Chinese capital.
"Beijing demand will be down 45 percent this year just because of license plate restrictions and more cities will follow," Chotai said. Tightening measures to slow China's economy may also deter car sales. The nation increased interest rates four times since October to curb inflation that accelerated to a 5.4 percent annual pace in March.
With a savings rate up to 30% of their income close to 90% of car purchasers pay cash

"You can expect the Chinese market to expand to something like 40 million by 2020 and obviously there's a possibility Toyota may be surpassed."

Source: Excerpted from Bloomberg

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