Signs of a looming economic slowdown failed to stop General Motors and its joint ventures from chalking up record sales in China last month – though it remains to be seen if the U.S. maker can continue to defy the unexpected downturn that is tripping up much of the rest of the Chinese economy.
That could be a serious problem for GM which saw record sales of more than 2 million vehicles in China last year, a surge in demand that helped it regain its position as global automotive sales leader. GM is, meanwhile, hoping to more than double that figure, targeting Chinese sales of 5 million by mid-decade.
Whether the Chinese market will cooperate is uncertain. Auto sales actually slipped during the first quarter, though the general consensus has been for about 10% to 12% growth for the full year — but even that target, modest by recent Chinese standards, is now in question.
“The increase in auto sales in China has recently slowed dramatically, and we expect this trend to continue because of slowing economic growth, high gasoline prices, and the expiration of government incentives for car buyers,” warns Standard & Poor’s credit analyst Robert Schulz.