General Motors in China: Coping with the Changes in the Automobile Industry
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Case Code: BSTR400 Case Length: 17 Pages Period: 2008-2011 Pub Date: 2012 Teaching Note: Not Available |
Price: Rs.500 Organization: General Motors Industry: Automotive Countries: China Themes: Internationalization, International Business, Industry Analysis |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In April 2011, General Motors China Group (GM China), the Chinese venture of Detroit-based automaker General Motors Company (GM), unveiled a new brand, the Baojun 630, at the Shanghai auto show. The launch was part of GM China's multi-branding strategy where the company aimed to launch local China brands to meet the changing needs of the market. With this brand, the company aimed to target first time car buyers living in Tier II and Tier III markets in China. This was also a bid to compete against domestic Chinese automakers such as Geely Automobile (Geely), Chery Automobile (Chery), and BYD Co Ltd. GM's history in China dates back to 1929 when it set up its dealership in Shanghai to sell Buicks, one of GM's entry-level luxury brands.
In 1991, GM set up its first joint venture (JV) in China; however, the JV closed down after it produced some 300 vehicles. In 1996, GM set up its operations in China. In June 1997, Shanghai General Motors Co. Ltd. (Shanghai GM) entered into a JV with Shanghai Automotive Industry Corp. (SAIC) to set up its first major operation in China. Though GM China captured a significant portion of the auto market in its initial years due to the early mover advantage, it soon lost out to global competitors like Volkswagen AG (VW), Honda Motor Company (Honda), and Toyota Motor Corporation (Toyota). In addition, the company also faced competition from local Chinese auto makers such as Chery and Geely.
Despite competition from foreign as well as domestic automakers in China, GM China's success continued with the launch of several brands catering to the market. In 2009, it became the market leader with a market share of 13.3 percent, overtaking VW. Some experts felt that GM China's sales would offset the declining sales of its flagship North American business which had suffered losses due to the global economic slowdown. Moreover, the sales from GM China were also expected to make up for the losses incurred by GM in the US.
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