GM making it big in China

The company now sells more cars in China -- where brands like Buick are adored -- than in the US.

By Kim Peterson Jul 27, 2010 3:52PM
China flag  © Jeremy Woodhouse/Photodisc/Getty Images General Motors is gearing up for a huge initial public offering, and investors mulling whether to jump into the stock should consider its business in China.

The company is killing it in China. In Shanghai alone, there are 27 dealerships selling Buicks -- the brand the Chinese have fallen in love with, The New York Times reports.

That's quite a different story than in the U.S., where people are leery of an automaker still 61% owned by the U.S. Treasury. And Buicks aren't exactly considered a hot car here.

The Times calls GM's China business "a surprising down payment of sorts for American taxpayers." And certainly the company will make China one of the centerpieces of the case it presents to potential investors.
GM now sells more cars in China than in the U.S. Its sales in that country are soaring nearly 50% from a year ago, the Times reports. And China is now responsible for a full 25% of GM's global sales.

So, in some ways, China will help U.S. taxpayers get repaid.

The total value of GM, at least according to analysts, is between $50 billion and $90 billion, the Times reports. The government will make a profit from its stake in the company if the value rises above $70 billion. China will do its part, contributing about $15 billion to that amount.

GM makes a variety of cars for China, including plush Cadillacs and the $5,000 Wuling Sunshine minivan, the Times reports.

Buick is a big draw for the Chinese because it's viewed as the car for the wealthy, stylish owner. GM sold almost 500,000 Buicks in China last year, which the Times says was almost five times what it did in the U.S. Buicks are said to be a favorite of China's last emperor.

Of course, China alone won't bring GM back to life. The company needs to win back North American drivers after losing market share on its home turf.

But at least GM can count on China as one ray of light. It's on fire there, with sales that are better than many were expecting, and doesn't show any signs of slowing down.

"During the bankruptcy process, GM China was the beacon in the night that GM always had in its back pocket," one industry analyst told the Times. "And China will be a vital cog in GM's machine going forward."

Tags: GM
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