GM Is Killing It In China After Tax Boost For Smaller Cars

November 5, 2015, 9:23 AM UTC

China stalls out again

Recall this Fox News headline from May 12, 2009: REPORT: GM TO SELL CHINESE CARS IN THE U.S. The story references a leaked report that GM planned to sell nearly 18,000 Chinese-made vehicles in America in 2011, with that number rising to over 50,000 by 2014. Well, no. GM didn't sell any cars made in China in 2011, 2012, or 2013, and safety and quality standards mean that no Chinese cars by any manufacturer -- American, European, or Chinese -- will be coming to the U.S. in 2014 either.
Photo: AFP/Getty Images

General Motors Co (GM) said vehicle sales in China rose 15% to a record monthly high in October, after the Chinese government cut taxes for smaller cars as part of its efforts to revive a flagging economy.

The company said retail sales in the first 10 months of 2015 climbed 2.9% from a year earlier to 2.8 million units, also a record.

The result provides a bright spot for China’s auto market which has struggled due to an economic slowdown in the world’s second largest economy. According to the China Passenger Car Association, car sales over the first nine months of the year grew at only 5.8% on the year, their slowest pace since 2012.

“The recently announced government incentive for vehicle purchases helped boost buying sentiment starting in October,” Matt Tsien, GM’s China President said in a press release published by the company on its website on Thursday.

China has introduced a slew of supportive policies, including halving the sales tax to 5% on cars with 1.6-litre engines or smaller, to boost auto sales. The changes came into effect from Oct 1. Automobiles in the 1.6 liter and under category account for around two-thirds of total sales in the country.

Other major global automakers, including Japanese automotive manufacturer Honda also posted double-digit sales last month. However, other carmakers have suggested that the boost to sales is no cure-all. Toyota Motor Co. (TOYOF), the world’s largest automaker, said Thursday it expected its profitability in the Chinese market to fall, even though it expects to meet its target of 1.1 million unit sales there this year.

Toyota also said that the slowdown in other emerging economies had led it to shave this year’s revenue forecast by the equivalent of $2.5 billion, to 27.5 trillion yen from 27.8 trillion yen.