GM CHINA SALES GAIN 21% IN MAY ON MINIVANS, CHEVROLET DEMAND

By Automotive News - General Motors Co. said vehicle sales in China last month increased 21 percent, boosted by demand for its Wuling minivan and Chevrolet sedans.

Deliveries of cars and minivans rose to 231,183 units in May from 190,674 units a year earlier, the company said today on its Web site. Sales for the first five months increased 12 percent to 1.2 million units, according to the statement.

GM is "on track" to meet its China sales targets and outperform the industry this year, Kevin Wale, its country head, said in an interview last week. The delivery growth reduces concern that an industrywide slowdown will worsen and add to the slump in Europe and stalling job growth in the U.S.

"Our numbers internally are looking pretty solid," Wale, GM's China president, said in a May 31 interview in Shanghai. "We're going to do a bit more than the market growth."

Even so, a decline last month in Buick and Cadillac deliveries led to the automaker selling fewer vehicles in China than in the U.S. for the first time this year.

Wales said China's vehicle market will recover in the second half of the year as first-time buyers return to showrooms.

Buick, Chevrolet

SAIC-GM-Wuling, the venture that makes mini-commercial vehicles used to transport goods and people, boosted deliveries by 36 percent to 127,749 units, according to the statement.

Buick sales fell 1.2 percent and Cadillac sales slid 2.2 percent, contrasting with Chevrolet deliveries, which increased 13 percent, according to the statement. Chevrolet demand had fallen 6.2 percent in April.

GM's sales growth last month comes on the back of a lower base for comparison in May 2011, when its deliveries fell for a second month after the removal of government incentives dented demand.

China's passenger ehicle sales rose 1.9 percent in the first four months this year, according to the China Association of Automobile Manufacturers. Including commercial vehicles, total auto deliveries for the January-to-April period fell 1.3 percent from a year earlier, the data shows.

Financial Incentives

Mounting optimism the government is preparing to introduce stimulus measures to revive auto demand may affect showroom sales in the near term, Wale said. Government officials are under increasing pressure to revive consumer demand after the economy grew slower than forecast and vehicle sales slumped.

China's cabinet agreed to revive financial incentives for consumers to trade in their passenger cars to help increase demand in the world's biggest vehicle market, a government official said last week.

Chongqing, with an area the size of South Carolina, will subsidize purchases of vehicles made in the city as the first local government to offer such incentives since Premier Wen Jiabao said last month the economy faces increasing downward pressure.

China in 2009 rolled out a cash-for-clunkers program to counter the global financial crisis, spurring 49.6 billion yuan ($7.8 billion) in new car purchases the following year.

GM Plans

GM plans to open 600 new dealerships this year and in April signed an agreement to build a fourth passenger car-making plant to cater to demand in inner provinces in the world's largest auto market.

Last month, Shanghai Automotive Industry Corp., said it approved selling back to GM 1 percent ownership in their joint venture for $91.4 million, subject to Chinese government approval. The deal restores GM's ability to have equal say on operational decisions in China, three years after it ceded control of the venture by selling a 1 percent stake for $85 million.

"There is still a European hangover that causes a lot of news that I don't think particularly impacts the Chinese consumer," Wale said. "So I'm still pretty optimistic it won't take much to bring them back into buying mode."