GM And China A Time-Tested Fit

The American Automaker Is Enjoying Record Gains In China’s Rapidly-Growing Automotive Market, Despite Difficulties At Home

GM has enjoyed record success in China over the past four years. But will domestic upstarts like BYD woo Chinese car buyers away? Photo © BusinessWeek

GM has enjoyed record success in China over the past four years. But will domestic upstarts like BYD woo Chinese car buyers away? Photo © BusinessWeek

With GM’s impending bankruptcy and restructuring in the news over the last week, it is easy to lose sight of the company’s global reach and mixed revenues. Although the company has had unprecedented difficulties in the North American market, brought on by the global economic downturn, in China — where the company has operated (with a roughly 30-year interruption) for decades — GM has been the leading foreign carmaker for the last four years.

Although China’s domestic car makers — spurred by huge foreign and government investment over the past few years — are making great strides, since the formation of the Shanghai GM joint venture in 1997, the company has worked hard to rebrand itself for the China market. All of this work has paid off in China, since as of last year, GM built an estimated market share of 12.1% on sales of nearly to 1.1 million units.

Last year, it was announced that GM, with the cooperation of PATAC, its JV partner, would begin construction on a $250 million research facility in Shanghai. So what does this partnership mean for the future of Chinese automotive design and production — particularly in terms of its luxury market? To throw out some predictions, it helps to look closer at PATAC. As the Malaysia Star writes,

PATAC aims to become China’s leader in providing competitive world-class automotive design, development and testing services. Its achievements include the development of Qilin, the first concept car designed in China by Chinese engineers and designers for the China market; the development of the Phoenix fuel cell concept vehicle and the development of a 2.0-litre four-cylinder engine for Shanghai GM.

It also participated in the re-engineering of the Buick LaCrosse premium sedan and Cadillac SLS luxury sedan for Shanghai GM.

Its facilities include a virtual reality design studio; a prototype laboratory; a powertrain lab; a kinematics and compliance lab; a noise, vibration and harshness test lab, emission testing facilities and short-distance test track that can simulate all types of road conditions.

As we saw during the recent Shanghai Auto Show, Chinese automakers, particularly in its JV market, are looking to inject new life into their burgeoning market. By investing heavily in R&D facilities, especially those that are researching next-generation hybrid and electric technology, we are starting to see joint ventures (and wholly-owned enterprises) compete with one another even more intensely. This will, naturally, lead to more innovation, as China’s dozens of car manufacturers fight for market share.

With companies like BYD garnering foreign investment and accolades, and GM Shanghai planning to export overseas into markets like the United States (while it continues to export to its current overseas markets like Chile), it looks as if China’s auto market is just getting started. While it will undoubtedly take time to become as mature as the car markets of neighboring Korea and Japan — and it will certainly take time for overseas consumers to warm to the idea of driving a Chinese-made car — if the fortunes of GM Shanghai over the past few years are any indication, the Chinese auto market still presents plenty of opportunities.

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One response to “GM And China A Time-Tested Fit

  1. Pingback: 2011 Bentley Mulsanne: Will It Find Success In China? « ChinaLuxCultureBiz

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