While GM faces heavy losses and possible bankruptcy in the U.S., and has just announced plans to lay off 1,600 white-collar employees, the car company's future in China looks bright.
"The demand for personal transportation remains strong [in China]," said Tom Stephens, GM's vice chairman, global product development.
GM's China sales in March 2009 rose 24.6% year-on-year to a record 137,004 vehicles, keeping it firmly installed as the biggest overseas automaker in the country.
Sales for Shanhai GM Corp., GM's China passenger vehicle joint venture with Shanghai Automotive Industry Corp., reached 46,054 units in March. GM expects to double sales in China during the next five years, and build a new factory to meet demand.
GM plans to introduce dozens of new and upgraded models, but the real star is the Chevrolet Cruze, a compact model introduced this month that "hits a sweet spot" in the brand's line-up in China, said Steve Betz, general director of Chevrolet at Shanghai GM.
The company already sells Chevrolet models such as the Epica intermediate sedan, Lova small car, Aveo hatchback and Sail small car family.
"It will really, really help us. We're hoping to get sales increases for the year between 18 and 20%. We think we really can do that," Mr. Betz said.
Ads feature "Prison Break" star
GM is promoting the launch with a marketing campaign featuring Cruze spokesman Wentworth Miller, the star of the American TV show, "Prison Break." The actor is famous in China even though the series has never aired officially in the mainland, a sign of how entrenched intellectual property theft is in China. "Prison Break" is well-known to the young white-collar urban Chinese, GM's target market for the Cruze model, through online video sites and pirated DVDs.
The Cruze will appeal to a more "youthful" market than existing GM cars in China, Mr. Betz said. "With this vehicle, hopefully it will change our whole complexity in the China market. It's a huge opportunity for us to grow share and grow the Chevy brand among a demographic that is younger and more sporty" than Buick and Cadillac buyers.
The Cruze will compete against other compact joint venture models in China, such as the Ford Focus and the Volkswagen Lavida. And like those brands, the Cruze will be marketed largely through digital media.
"We did a lot with the internet to engage our customers. Digital for us has been everything," Mr. Betz said. That includes a Chinese-language web site, cruze.chevrolet.com.cn, and a viral e-mail teaser campaign to promote test drives.
Through a live web cast on Sina.com, potential car buyers--and "Prison Break" fans--could watch the launch party attended by GM executives and Mr. Miller on April 19, hours before the start of the Shanghai International Automobile Industry Exhibition. GM says it has already received over 7,000 orders for the Cruze through the internet.
Over 1 million cars sold last month
Digital media is more important than conventional media spending in the auto category in China, said Tomaz Mok, managing director of the Shanghai GM account at McCann Erickson, the agency for Chevrolet and Cadillac in China. Media planning is handled by Zenith Media, Shanghai.
"Prospective car owners, especially younger ones, always check car details and specs, editorial reviews and other information online thoroughly before making a purchase," Mr. Mok said.
And purchases are on the rise. After a rocky patch when the growth of car sales in China slowed significantly in the second half of 2008, sales have speeded up again thanks to the government stimulus plan that introduced subsidies and tax cuts to drive demand for smaller, more efficient vehicles like the Cruze.
The Cruze launch doesn't guarantee smooth sailing for GM in China, however. Rivals are also coming out with their own mass market, fuel-efficient cars, such as the Ford Fiesta relaunch earlier this year. And VW expects to double sales in China by 2018. The big Japanese car makers, Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. all say their sales will grow in China this year. Hyundai Motor Co. plans to roll out new models this fall.
Much of GM's momentum in China during the past year depended on mini-commercial vehicles produced by SAIC-GM-Wuling Automobile Co, another joint venture in China that sold 90,950 vehicles in March 2009, up 38% from a year earlier. Once a dominant player in sales to local businessmen, Buick has lost much of its luster in China to Mercedes-Benz, Audi and BMW models.
Chinese profits won't help GM too much back in the U.S., where the company desperately needs cash, since it operates through a joint venture, not a wholly-owned enterprise. And Chinese car buyers are well aware of the problems facing GM and other American car companies back home, which might make U.S. brands less appealing.
GM execs in China insist they are focusing on opportunities in China, not the company's problems back home.
"We just launched new Regal model in China for Buick, now we have the Cruze for Chevrolet and we have another big new product coming later in the year," Mr. Betz said during a break from the hectic, massive Shanghai auto show this week. "We see nothing but positives."
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