General Motors Gears Up in China
March 21 2016 - 08:30AM
Dow Jones News
BEIJING—General Motors Co. is raising its bet on China even as
growth slows in the world's largest car market.
The U.S. auto giant said Monday it will roll out more than 60
new or refreshed car models in China in the coming five years, and
that by 2020 all products from its key Cadillac, Buick and
Chevrolet brands will offer Internet connectivity, as it looks to
attract more drivers in its biggest market.
"Even though the China market is maturing, there will still be a
tremendous source of growth for us in both the short term and long
term," GM President Dan Ammann said at a briefing in Beijing. GM
will also introduce models featuring autonomous-driving technology
and hybrid and electric vehicles.
The company expects China's auto market to grow 3% to 5% a year
until 2020. Last year, auto sales in China rose 4.7% year-over-year
to about 25 million vehicles, compared with a 7% increase in 2014
and booming double-digit rates in prior years.
Demand is expected to cool further this year. A stock-market
plunge in the first two months exacerbated fears that China's
slowdown may be worse than expected. In 2015, China grew at its
slowest pace in 25 years.
However, growing affluence among Chinese consumers has spurred
demand for luxury cars and spacious crossovers. Last year, Chinese
sales of sport-utility vehicles and crossovers jumped 52% from a
year earlier, and sales of luxury cars rose more than 10%,
according to data from PWC's consulting group Strategy&.
"We will continue to focus on the segments where the demand is
strong and growing," said GM China President Matt Tsien. He said
that about 40% of GM's new and refreshed offerings in China through
2020 will be SUVs and high-end minivans. The company will add 10
new and updated models from the Cadillac brand to the Chinese
market.
With an eye on some of the world's most congested roads in
China, GM will offer more automated safety features including
lane-drift alerts, blind-spot detection and semiautonomous
technology, allowing for hands-free driving on the highway at speed
and in heavy traffic, executives said.
Car makers and high-tech companies are racing to gain an edge in
autonomous driving and connected cars amid a rapidly changing
industry. "As GM's largest and the world's largest vehicle market,
China should also be a driving force of that change," said Mr.
Tsien, adding that GM was exploring ride-sharing and safety
technology there.
Ride-sharing services like Uber Technologies Inc. and its rivals
such as Didi Kuaidi Joint Co. have emerged as alternatives to car
ownership, and technology giants such as Apple Inc. and Alphabet
Inc.'s Google are working on fully-electric vehicles in a potential
threat to established auto makers.
Ford Motor Co. is investing about $1.8 billion in China through
2020 to research how to add greater smartphone connectivity,
autonomous driving and other smartcar features to its Chinese
products. Chinese Internet search giant Baidu Inc. is developing
autonomous cars and plans to field its first vehicles in China
within three years.
Earlier this month, GM acquired a San Francisco company that
developed a system for retrofitting existing vehicles with
autonomous-driving software, after a $500 million investment in
ride-hailing service Lyft Inc. in January.
Consulting firm McKinsey & Co. said in a recent research
note its survey of car owners world-wide found that 60% of Chinese
respondents were willing to switch their car brand for improved
connectivity services, compared with 20% of Germans and 33% of
Americans.
Amid a drive by the Chinese government to reduce emissions, GM
said over the next five years, it and its joint ventures will
launch more than 10 new green-powered vehicles in China under the
Chevrolet, Buick, Cadillac and Baojun brands.
China's generous government incentives for electric-vehicle
ownership have resulted in a burst of sales. The country reported
sales of electric and hybrid vehicles including cars and buses
quadrupled in 2015 from the previous year.
Rose Yu
(END) Dow Jones Newswires
March 21, 2016 08:15 ET (12:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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