Despite a downturn in the first two months of 2005, between January and June 2005, GM's two Chinese joint ventures saw an 18.9% sales increase year-to-year, selling 308,722 vehicles in China during that period, the company reported. In a direct comparison, Volkswagen, the customary sales leader in China, sold 262,198 vehicles. But how direct is that comparison? VW officials claim to report retail figures, while GM's numbers, they say, are wholesale. Is GM the new top dog in this, the year of the Wood Rooster?
Even if the companies' sales numbers were even, GM's performance would still be a blow for VW, which has been selling cars in the often volatile Chinese market for a decade longer than GM. GM's two joint ventures — Buick, Chevrolet and Cadillac with Shanghai Automotive, and minicars with Shanghai and Wuling Automotive — have continually paid dividends in the form of market-share gains, despite slowing market growth, a resulting price war and rising costs in the past year that caused GM's profits to dive from $162 million to $33 million in the first quarter of 2005. Nonetheless, any profit is good profit, and GM's (and Toyota's) agressive Chinese expansion — including GM's liberal use of its Daewoo affiliate for design duties — has cut VW's market share from more than 50% to 25% over the past several years. And that may be the most telling metric.
GM May Help Shanghai Auto Create Independent Brand [internal]