GM posts record first-half China vehicle sales

SHANGHAI, July 12, 2004; Reuters reported that General Motors posted a 58 percent leap in first-half vehicle sales in China to a record 259,653 units, the U.S. firm said on Monday, outpacing a downward trending market.

That comes after GM outsold Volkswagen AG's main Chinese unit for the first time in June after the Detroit giant slashed prices -- a breakthrough analysts say may rekindle a price war in the world's fastest-growing major car market.

Analysts said GM rolled more cars out of Chinese showrooms in June after cutting prices on two core models by up to 11 percent in mid-May -- spurring a similar move by rival Volkswagen.

GM sold 24,040 sedans in June, up about five percent on May.

The sales figures announced Monday included mini-buses and other commercial vehicles produced at GM's various ventures.

Nationwide, sales of cars rose 29 percent to 1.123 million sedans in the first half, industry sources have said. Figures for all vehicles were not yet available.

GM's flagship venture with Shanghai Automotive Industry Corp saw sales leap 92.4 percent to 141,319 vehicles in the first six months, the company said -- much of that cars.

The U.S. company also operates other ventures in China, such as SAIC-GM-Wuling, based in the southern region of Guangxi.

GM said on Monday it commanded 11.7 percent of the domestic car market in the first five months of 2004, versus market leader Volkswagen's roughly 30 percent.

"Long term, we remain very confident," said GM's China spokesman Dahpne Zheng.

"As an on-going effort, we will continue to closely monitor the competition and take necessary measures to ensure the competitiveness of GM products in the marketplace."

Analysts say further price cuts are inevitable as Volkswagen fights to reclaim its top spot in the pivotal Shanghai market.

A spate of multinationals are spending a combined $13 billion to triple capacity to six million cars annually by the end of the decade -- defying concerns of a glut in two to three years.

GM and its local partners are spending $3 billion over the next three years to raise annual capacity to 1.3 million units in a country it expects to become its number two market in 2004.

The company has said it is not worried by slowing overall car sales in China -- a market some analysts think could grow just 10 percent this year on 2003, compared to a near-doubling last year.

That would still surpass more mature markets, executives say.