Our oracle of Shanghai, Kevin Wale, president and managing director for GM’s China operations, is chickening out. “Anything is possible in China. We are very bullish about future potential here,” he said. And then he predicted that GM China will sell 2m vehicles this year, China Daily reports. Why is that chickening out, you ask?
Well, “the automaker sold 1.83 million vehicles in China last year, up 67 percent over 2008,” China Daily reminds its readers. If GM China sells 2m units this year, then this would be a rise of 9.6 percent over last year. Come on, GM. That’s the best you can do?
March sales at GM’s Chinese presence were up 68 percent. Auto sales in China jumped nearly 72 percent to 4.61 million units during the first quarter. What are the plans at GM China for the rest of the year? Go to sleep? Not so, says Bloomberg. GM China intends to “introduce 25 new and updated models in China by the end of 2011.” Their confidence in that wave of newness appears to be low.
Followers of the TTAC patent-pending market forecasting method are alarmed. As GM goes, so goes the nation. The Chinese nation. GM usually is a few percentage points ahead of the market. So if Wale is right, how much will the Chinese market grow? 7 percent? That would be an absolute doomsday scenario. Wait, it’s getting worse.
“GM expects its annual sales in China to exceed 3 million units in 2015,” says China Daily. This might impress the amateur observer. Insiders are absolutely horror-struck. To get to 3m cars sold in 2015, all GM needs to do is plug an even lower and even lamer annual rise of 9 percent into their spreadsheet. That’s all?
Ever since 2004, GM China had double-digit growth rates in China, in line with the market. In 2008, when GM was just about mammaries-up, GM China grew 6.06 percent, slightly under-performing the market. And all they are forecasting for the next years is around 9 percent?
Rao Da, general secretary of the China Passenger Car Association, predicts “that China’s vehicle sales will surpass 17 million units this year, growing by about 25 percent.” According to TTAC’s patent-pending market forecasting method, this would translate into some 2.4m Chinese GMs sold in 2010 alone. What’s going on here?
Does Wale think that the Chinese market will grow in the single digits for the next five years? Or does he know what we don’t know: GM is planning to solidly under-perform the Chinese market?
Let’s hope this is just one of the CYA corporate moves where the target is set so low that everybody can come out as the hero in the end. If not, Wale will end up as chicken soup. Or transferred to Japan. You know, where Walehunting is still legal.
“TTAC’s patent-pending market forecasting method”
Doea this involve chicken bones?
Perhaps he is being a bit too conservative, but it’s better to underpromise and overdeliver than to do the opposite. If it were the US, if GM were to publicly predict 67% growth and then actually post only, say, 50% growth, they’d be opening themselves up to shareholder lawsuits. Well, you know, if they were still publicly traded.