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Business
Print Edition> Business
UPDATED: December 6, 2008 NO. 50 DEC. 11, 2008
The Big Three's New Hope
The U.S.-based automakers are counting on greater sales growth in emerging markets for survival
By DING WENLEI
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GM reported its auto sales increased 12 percent in China, its largest market outside the United States, in the third quarter, although its global sales during the quarter dropped 11 percent, affected by reduced demand in the United States and Western Europe. GM's North American sales dropped 18.9 percent during the period.

GM expects sales in China to be flat for the next six to nine months and then back to their natural long-term growth of 10-15 percent, according to a Reuters report.

GM China and its joint ventures here are profitable and have enough capital for investment, Wale said at the forum. GM makes cars in China through Shanghai GM, a joint venture with SAIC Motor Corp., the largest domestic automaker. The company also has a minivan venture in the country.

From 2009 to 2011 GM would introduce five new models each for Buick and Chevrolet, including the Buick LaCrosse and Chevrolet Cruze, Wale said. The latter just debuted in Asia at the Guangzhou Auto Show in late November where GM introduced three new heavyweights-the compact Chevrolet Cruze sedan, imported Buick Enclave SUV, and zippy Cadillac CTS-V, to bring the number of GM's models in China to 24. The three models will be available for sale here in early 2009.

The current global financial crisis has compelled GM and its Shanghai venture to upgrade its vehicle lineup in China by introducing more hybrid or all-electric vehicles and adopting more European and U.S. technologies in order to become increasingly integrated into GM's global strategies, Shanghai GM General Manager Ding Lei told Luo Yu, who runs his own blog at Sohu.com, during the show.

Ding said he believed GM could pull through its cash shortage, because of its new technological strength and the fact that it has kept good momentum in Latin American markets and the Asian Pacific region.

Ford and Chrysler are also aiming at expanding their sales in China.

In the first three quarters of 2008, Ford sold 240,879 passenger cars and commercial vehicles in China, a 7-percent increase from a year earlier.

"A number of factors, both internal and external to China, helped contribute to an overall slowdown in the domestic auto market during the third quarter," said Robert Graziano, President and CEO of Ford Motor China in a press release. "While our growth continued in China, we also focused efforts on further improving the class-leading quality, safety and value of our products as well as our dealers and Ford brand experience for our customers."

Ford Motor introduced several new models during the third quarter, including the brand new, five-seat Ford-SMAX, the restyled Ford Mondeo and the seven-seat Ford S-MAX with improved safety features. Recently, Changan Ford Mazda Automobile Co. Ltd. introduced the new 2009 Ford Focus. This extremely popular model has racked up sales of more than 300,000 units since being introduced in China in 2003.

Chrysler, the smallest of the Big Three, does not lag far behind Ford. From the beginning of the year through the end of May, Chrysler's sales in the Asia Pacific region grew by 52 percent. Much of the growth was generated by sales in China, which soared 134 percent.

In July, Chrysler announced an agreement with China's Great Wall Motor Co. to share technology, component parts and distribution channels.

Chrysler's spokesperson Shawn Morgan said in a statement that the agreement "represents part of Chrysler's ongoing efforts to explore opportunities to expand the company's involvement in the development of China's auto industry, as well as growing Chrysler's global business through the right partnerships."

Dire situation

American auto sales plummeted 37 percent in November to their lowest monthly tally in 26 years due to tightening credit and low consumer confidence, marking the 13th straight monthly drop. The severe sales slump has accelerated automakers' "cash burn" in which a company spends more money than it takes in, and forced the Big Three to appeal to Congress to avoid declaring bankruptcy.

Chief executives of the Big Three flew to Washington on November 19 to plead for a $25-billion industry bailout. Lawmakers told them to prepare a detailed restructuring plan to justify their future viability before their request could be further considered.

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