General Motors in China: Coping with the Changes in the Automobile Industry

General Motors in China: Coping with the Changes in the Automobile Industry
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
General Motors in China: Coping with the Changes in the Automobile Industry
Abstract Case Intro 1 Case Intro 2 Excerpts


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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