Will Chinese car buyers have a chance to purchase the ultra-high-end Cadillac Celestiq from GM directly?
Cadillac photoGeneral Motors wants to take Chinese market share from its local competitors.
The company will launch a direct-to-consumer selling model in China, according to a report by Reuters. GM (ticker: GM) didn’t immediately respond to a request for comment from Barron’s .
The new effort likely will be for higher-end cars made in the U.S. and exported to China. It will be called the Durant Guild, referencing GM co-founder William Crapo Durant.
GM is big in China already. But market share has been slipping in recent years.
The company, with its joint venture partners, sold about 2.9 million vehicles in China during 2021, capturing about 11.2% of the market. GM sold about 3.1 million vehicles in 2019, representing about 12.2% market share. China sales topped 4 million units in 2017, representing 14.3% market share.
The new sales efforts could be designed to stem the market share losses.
Electric vehicles are a big reason for declining market share. EVs accounted for, very roughly, 15% of new car sales in China in 2021 and have been accounting for about 25% of new car sales in recent months. GM actually has the best-selling EV in China through its joint venture with SAIC Motor. It’s the very-low-priced Wuling Hongguang Mini EV that sold about 400,000 units in 2021.
GM, however, would probably like to sell more EVs in China that are built on its own Ultium EV platform technology. GM plans to sell 1 million EVs in North America by 2025 and another 1 million outside North America. The majority of those sales would be in China.
GM stock wasn’t reacting to news of the new Chinese plan. Shares were flat in premarket trading while S&P 500 and Dow Jones Industrial Average futures both gained about 0.1%.
Coming into Thursday trading, GM shares have declined 32% this year. Higher inflation and rising interest rates have investors worried about both profit margins and new car demand. Most cars are purchased with financing and higher rates make monthly payments more expensive.
Wall Street shares some of those fears. GM’s earnings estimates for 2023 have gone from about $7.40 a share to $6.40 over the past few months. The 13% decline, however, is much smaller than the stock’s drop in 2022.
Write to Al Root at allen.root@dowjones.com
