GM says sales growth in Asia outpaces U.S., Europe

BANGKOK, Oct 18, 2003; Vithoon Amorn writing for Reuters reported that General Motors Corp said on Saturday its booming sales in China helped its Asia-Pacific operations outperform business growth in key regions such as the United States and Europe this year.

Powered by GM's strong presence in China, the Asia-Pacific region generated a $162 million net profit for the giant U.S. auto company in the third quarter of 2003, or about 38 percent of its global earnings for the period, GM said in a statement

"China's market has been growing at a very fast clip. What we say about Chinese growth is not a question of if, but it's simply a question of when," Frederick Henderson, group vice president, told a media briefing.

Henderson projected that GM's total vehicle sales in China would surge to nearly 350,000 units in 2003 from 264,101 in 2002.

He said the firm had secured a Chinese market share of nearly eight percent and hoped to raise it in future.

GM's market share in China is second only to Volkswagen AG (XETRA:VOWG.DE - News) but way behind the German company's share of well over a third.

"We moved fairly aggressively in 1996 and 1997 to put our footprint there, and we started to reap some of the benefits of that early mover strategy there in the last several years."

CAPACITY EXPANSION

"In terms of making additional investment, we have done merger and acquisition transactions to create additional capacity in our company in the past two years," he said.

GM now makes most of its cars in China at its sprawling Shanghai plant, a hive of activity on the outskirts of China's commercial hub the size of 130 American football fields.

Sales of passenger cars in China surged 72 percent to 1.25 million units in the first eight months of the year, according to consultants Automotive Resources Asia.

Executives of the U.S. giant were coy about reports of a new two-billion yuan plant for Shanghai GM, its main venture in the country, but did say its SAIC-GM-Wuling venture -- which makes vans, trucks and will soon make mini-cars -- would expand capacity to 380,000 units by 2006 from 180,000 now.

Henderson said Thailand, where GM had invested more than $700 million in a 130,000-unit plant, would continue to be a major Asian market.

But he declined to say whether GM would move to challenge dominant Japanese competitors in the country's big domestic pick-up truck sector.

"Fifty-five percent of the Thai market is pick-up. And if you want to be a substantial player in Thailand, you need to have a pick-up. We are looking very carefully at what we can do to do that," he said.

In 2002, a total of 241,266 one-tonne pick-up trucks were sold in Thailand, the second biggest producer of the small commercial vehicle after the United States.

William Botwick, president of GM Thailand, told reporters his firm would produce 40,000-45,000 vehicles in Thailand in 2003, up 15-20 percent from last year. Most of its output is for export.

He and Henderson said GM, along with other U.S. automakers, had recently conveyed its concern to Vietnam over its decision to raise auto tax to help protect the country's domestic car parts industry.

"One of the main issues in Vietnam is the policy for the future. Announcements of policy changes without sufficient lead time for us to react, that is the main problem," Botwick said.

"The government is trying to encourage the development of local contents. The industry is generally supportive of the government's move...but there's some disagreement on how to do that," he said.