GM Shake Up In China, Volkswagen’s China Gains

Thanksgiving isn’t a big celebration in China, nor is the day that many consider a holiday, the day after Thanksgiving. It’s consequently not terribly surprising that big news was made today by General Motors Company (NYSE:GM) with regards to its China operations. While off topic, and Thanksgiving has more to to with Plymouth Rock, Spain financed Columbus’ trip to the New World as a potential route to China, plus I’ve been in a three times scale recreation of his Santa Maria in the southeast city of Shenzhen.


GM Tsien’s ascension

General Motors Company (NYSE:GM) announced today that Matthew Tsien, a 53-year-old vice president of GM’s China arm, will succeed Bob Socia, 59, as president when he retires at the end of the year. A GM spokesperson confirmed today that this was always the plan when Mr. Socia took the job just over a year ago.

In addition to changing the person filling the position, it’s being reported that Mr. Tsien will begin reporting directly to GM CEO Dan Akerson rather than General Motors Company (NYSE:GM) China Chairman Tim Lee. This move shows the importance of GM’s China operations essentially valuing it as much as its North America division.

“The change in reporting reflects the growing importance of China to GM, and ensures that the day-to-day needs of the China market are discussed at the senior leadership level and integrated into our global strategies,” the General Motors Company (NYSE:GM) spokeswoman said.

Mr. Tsien’s successor to his post of vice president of planning and program management for GM China has yet to be announced by GM.

General Motors Company (NYSE:GM) is firmly entrenched in China but it is absolutely vital that it holds the ground it enjoys in the “Middle Kingdom” and largest car market in the world.

GM’s CEO, Dan Akerson, announced in August that it was set to have another look at how General Motors does business in China while announcing a major rethink.

It wouldn’t be a terrific surprise if GM made more leadership changes given the impending retirement of Mr. Lee. China is responsible for 30% of General Motors’ international vehicle sales and the company announced earlier this year that it would invest over $11 billion in China by 2016, and build four new assembly plants. It’s believed that the addition of these plants will bring GM’s production in China up to over five million vehicles per year.

Volkswagen gains

However, in a semi-dramatic turn of fortune in the first nine months of this year, Volkswagen has seen an 18% increase in sales and is currently leading General Motors Company (NYSE:GM) as the largest foreign maker of automobiles for Chinese consumption. VW, for the first three quarters, has sold 2.35 million cars compared to GM’s 2.31 million. If those numbers continue, VW could unseat GM as the largest car maker in terms of sales, a position that GM has comfortably held for the last eight years.

But competition continues to erode GM’s position in China. For the first nine months of this year, GM trailed Volkswagen in terms of sales. VW said its China sales rose 18% to 2.35 million cars and sport-utility vehicles, while GM sales grew 11% to 2.31 million.

If VW holds its lead, the German auto maker could unseat GM as the largest foreign car maker in China in terms of sales. GM has held that title for the past eight consecutive years.

GM has been slow to address the growing SUV market in China along with sales of luxury vehicles.

“The whole movement to SUVs is a phenomenon that we are all trying to keep pace with,” Mr. Socia said.

“One of our main priorities is to grow faster than the market,” Mr. Socia said. To do that GM will launch nine new or refreshed SUV models in the next five years.