What is in this article?:
- Automakers, Suppliers Confident China to Remain on Strong Growth Track
- Tier 2, 3 Cities Expected to Drive Sales for GM
and GM are among those looking to expand their sales networks in the country and add models to their product portfolios. Most forecasts call for sales to rise 7%-10% in 2014.
Economy Baojan brand counted on to appeal to buyers in smaller cities.
Tier 2, 3 Cities Expected to Drive Sales for GM
That is a common refrain.expects market growth to be “more modest, but more sustainable,” agrees GM China President Matt Tsien.
The automaker still expects to sell up to 3.5 million vehicles in China this year in a total market of some 24 million. GM’s joint ventures will invest $12 billion over the next three years, Tsien says, setting the automaker on a path to boosting local manufacturing capacity 65% by 2020.
GM is counting on sales in China’s Tier 2 and 3 cities to boost sales of its Buick, Chevrolet and Cadillac brands. For even smaller cities, it has Baojun, the new brand out of SGMW, its joint venture with Wuling and.
“Baojun was introduced to take advantage of a growing customer base,” says Ray Bierzynski, executive vice president for SGMW.
The brand launched two new models at the Beijing show. Baojun sales could double this year to 200,000, Bierzynski says.
Consumers buying replacement vehicles or a second car will further expand the market in China, Tsien says. GM figures that could account for 80% of purchases in Tier 1 cities such as Beijing.
GM also will add to its dealership network. Buick was the first brand GM produced in China and its network is “good,” Tsien says, but “Chevy and Cadillac need build-out.”
As for government restrictions on the number of cars licensed or sold in some of China’s cities, few expect that to have a significant impact on overall growth.
People find ways to get a license plate, such as buying the car in a nearby town, says Jack Cheng, China country manager at Magneti Marelli (China). “It won’t stop people from buying cars.”
Any slowdown in luxury-car sales due to a central government call for less conspicuous consumption by China’s ruling class also doesn’t worry Cheng.
“Government fleet purchases may be more under control, but that means more private owners,” he says. Cheng figures the car market could grow 10% annually for the next three years.
Tom Tan, president of(China) Investment, sees China’s market growing 8% this year. While that’s down from last year’s 14%, he is unfazed.
Some 22 million light vehicles were sold in China last year, Tan points out. “Think about the size of the market,” he says, adding, “We are confident we will outgrow the market because of our technology.”