General Motors GM recently reported 12% year-on-year growth in the third quarter for vehicle sales in China. The company, along with its joint ventures, delivered 771,400 vehicles in China during the quarter. General Motors is the second biggest foreign automaker in China by units after Germany’s Volkswagen AG VWAGY.
General Motors had witnessed a 5% sales decline in China during the second quarter as certain parts of the country were still recovering from the coronavirus pandemic-induced lockdown restrictions.
However, things gradually started to pick up in the July-September quarter. Auto sales are showing signs of recovery as demand for new vehicles has been rising following the gradual reopening of the economy. This has aided General Motors to gain momentum and boost its sales in China, thus marking the automaker’s first quarterly sales growth in two years in the country.
Automakers like Toyota Motor Corporation TM and Honda Motor Company HMC also witnessed sales jump in China during the September-end quarter.
Q3 Segmental Performance
The mass-market brand Buick deliveries witnessed 26% growth in the third quarter from the prior-year level to over 250,000 units.
The luxury brand Cadillac deliveries topped 65,000 units in the quarter under discussion, marking a year-on-year increase of 28%. Its SUV portfolio, comprising XT4, XT5 and XT6, registered stable growth, with collective sales of more than 40,000 units.
The no-frills brand Wuling sales jumped 26% year over year to more than 270,000 units, as the brand maintained its dominant position in commercial vehicles.
However, Chevrolet recorded sale of more than 77,000 vehicles in the third quarter, reflecting a 20% year-over-year decline. Nonetheless, it had continued to enhance its product portfolio by launching a refreshed version of Equinox SUV and adding a five-seat variant to the Blazer SUV. Also, Baojun sold more than 100,000 units in the July-September period, down 19% year on year.
Thus, the Detroit automakers luxury vehicles, mid-size/large SUVs and MPVs, headed by the Cadillac XT5 and the Buick Envision and GL8 lineup, delivered stellar performance in particular, facilitating the overall recovery in sales. Moreover, the company’s compact models returned to four-cylinder engines which fueled this sales growth.
The EV Push
Amid the heightening climate-change concerns, the Chinese government is more inclined toward companies offering green transportation services.
Remarkably, General Motors recently rolled out more than 10 new energy vehicles (NEV) in China, including the Buick VELITE 7 all-electric SUV, VELITE 6 plug-in hybrid electric vehicle (PHEV) and an all-electric model — the Hong Guang MINI EV — unveiled in July. In fact, the Hong Guang MINI EV became the most coveted NEV model in China this August.
Apart from this, the auto giant plans that more than 40% of its launches in China in the upcoming five years will be NEVs, in sync with the company’s goal to build a zero-emission future.
General Motors currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of General Motors have declined 12% on a year-to-date basis, underperforming the industry’s 140.8% rally.
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