GM Won't Meet Goal to Grab 10% of Asia's Market Share by 2004

October 18, 2002

DETROIT, writing for The Wall Street Journal reported that General Motors Corp. , which has been trying to boost its market share across Asia to 10% by 2004, will fall short of meeting that goal, said Phil Murtaugh, head of GM's China Group.

"I don't think we'll get there by 2004," he told a small group of journalists at a hotel near Detroit.

Mr. Murtaugh added falling short means only GM sales are counted, not those buy the company's alliance partners, such as Japan's Suzuki Motor Co., in which GM has a 20% stake. He said GM will meet the threshold by 2005 or 2006. The company's market share is currently slightly more than 4%.

Mr. Murtaugh's confidence stems in part from the fact that his definition of GM vehicles includes vehicles built and marketed in the region by GM Daewoo Auto & Technology Co., a South Korean joint venture GM created out of the former Daewoo Motor Co. GM purchased three of Daewoo's main production facilities for $ 251 million and formed the venture with Suzuki, Shanghai Automotive Industry Corp. and Daewoo creditors.

"GM Daewoo will make a significant contribution to" helping GM attain its 10% objective, said Mr. Murtaugh, adding, "China's continued growth [in auto sales] will make a significant contribution to that."

He went on to say that although China's auto market is growing rapidly and tariffs on imported vehicles are coming down, "I really don't believe imports are going to be a major factor in China."

Tariffs on imported vehicles dropped this year to between 44% and 51% from between 70% and 80%, and they are expected to fall to 25% by the middle of 2006. But even as import taxes tumble over time, at 25% tariffs are likely to prove as such a "huge barrier" that Mr. Murtaugh believes imports' share of the Chinese auto market will be limited.

He cited the 25% duty the U.S. levies on imported pickup trucks, which essentially has helped the Detroit auto makers keep foreign-built pickup trucks from penetrating the U.S. market. A majority of pickup trucks sold in the U.S. by foreign auto makers are built locally at their plants in America.

Mr. Murtaugh said GM's primary strategy in China will continue to be one of catering to Chinese demand with locally produced vehicles, as falling tariffs on imported components also should help GM keep costs of running manufacturing operations sufficiently low in China. "We basically are going to import in niche segments only where there are relatively low volumes," he added.

Demand for automobiles in China is growing by leaps and bounds. The size of the market, which was about a million vehicles in 1992, grew to 2.4 million vehicles last year. This year, consumers and businesses are expected to snap up some 3.4 million vehicles, Mr. Murtaugh said. GM through its joint ventures with Chinese auto makers sold about 167,000 vehicles through the end of August. That includes sales of a joint venture GM formed this summer with a Chinese mini- vehicle producer.