Under Chinese industrial policy, access to the world’s largest auto market is only granted if makers establish joint ventures with local companies.
General Motors and its Chinese government required joint ventures posted record sales in June. Together 236,207 vehicles were sold in total. During the first half of the year, 1,567,392 cars and light trucks were delivered. Both were more than 10% increases in the world’s largest auto market where GM is and has been the clear sales leader for eight consecutive years. GM has 12 joint ventures, two wholly owned foreign enterprises and more than 55,000 employees in China.
Ford Motor and its partners also posted records, albeit at much smaller volumes, during June at 75,254 with 407,721 year-to-date for 47% and 44% increases, respectively. Ford’s commercial vehicle venture with Jiangling Motors (JMC) also delivered its best first half performance with 110,230 sold, an increase of 7%. June sales were up 6% at 16,022. Despite a contracting commercial vehicle market, first-half sales of the Ford Transit jumped 21% from a year earlier, at 32,553.
Nonetheless, stockholders at Ford Motor are so far not benefiting from the success in China. Rapid expansion and payments to partners are keeping money in China and not returning it to the U.S. Ford lost $72 million in Asia-Pacific during 2012. General Motors shareholders are doing much better. GM’s International Operations full-year EBIT-adjusted was $2.2 billion in 2012 compared with $1.9 billion in 2011. However, GM pays no dividend on its common stock.
“We expect demand for our lineup of passenger cars and commercial vehicles to remain robust through the end of the year,” said Bob Socia, President, GM China.
“Our performance demonstrates that we continue to build momentum in China,” said John Lawler, chairman and CEO of Ford China.
(See Ford Makes $8 Billion in 2012 – Almost all in North America and GM Earns $4.9 Billion in 2012 down from $7.6 Billion in 2011)
