Bob Socia at Auto Shanghai 2013 Remarks 2013
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Remarks by Bob Socia President of GM China and Chief Country Operations Officer for China, India and ASEAN GM China Press Conference April 20, 2013 at Auto Shanghai 2013 Good evening. Thank you, Tim (Lee). You often hear guys like me talk about China's vehicle market as being a marathon, not a sprint. And that's true. As tonight's theme suggests, it is a long journey. I feel fortunate to be the head of GM China at such an important point in our history and our journey. The market continued to grow last year, reaching a record 19.4 million units. The growth has continued this year, with vehicle sales up 10.4% percent in the first three months to a record 5.4 million units. We expect industry sales to grow around 7 to 8 percent this year. GM has also gotten off to a strong start this year. We set an all-time monthly sales record in January achieved record March sales and set a new sales record for the first quarter. In the first three months of 2013, GM and our joint ventures sold a record 816 thousand vehicles, which was up 9.6 percent from the same period last year and posted a 15.1% market share. And here's some late-breaking news we expect to sell our 1 millionth vehicle this weekend. It will be the earliest we have ever reached this milestone in a calendar year. This is a great start to the year and a big accomplishment for our team. One of the factors in GM's success here in China over the past 15 years is our aggressive investment in three key areas of our business: products, plants and people the three P's. Although we've been moving very fast, we don't plan to take our foot off the gas pedal. Between now and 2016 our JVs’ capital expenditures will be about $11 billion in China, with a focus on the three P's. Let's start with the first of the P's -- products. 1 This year, GM and our joint ventures will launch 17 new and upgraded models. SGM had a strong start to the year with the launch of the Cadillac XTS luxury sedan in March. We also introduced refreshed editions of the SRX luxury SUV Cadillac's best-selling model in China as well as the Buick Excelle and LaCrosse. Speaking of Buick although it's only a concept car and not planned for production at this point I hope you had the opportunity to see the Riviera at the show today. It was developed here at PATAC and gives a preview of Buick's future design direction. It's also equipped with a plug-in hybrid electric propulsion system so it's both beautiful and energy-efficient. The all new Chevrolet Cruze hatchback was unveiled today and will arrive in dealers later this year. Cruze is one of our best sellers, and we think the hatchback version will be popular with younger people and families looking for a functional car with a sporty appearance. SGMW also continues to build upon its mini-commercial business where it's already very strong. Wuling has some exciting new entries coming, including new versions of the Rong Guang and Hong Guang passenger vans. The Hong Guang MPV has been growing in popularity, with sales of more than 300,000 vehicles last year alone. We think it can sell well outside of China also. We will begin selling a localized version as the Chevrolet Enjoy in India next month. The MPV segment is one of the fastest growing in India so we expect the new Enjoy will do well there. Wuling will also update the Sunshine its best-selling model later this year with both regular and long wheelbase versions with high efficiency engines. The Baojun 630 is also doing well in its 2nd year in the market. This year we have updated the interior based on customer input. FAW-GM is also continuing to improve and build its product offerings. For 2013 FAW-GM will introduce 2 new Jiefang light-duty trucks the S230 mid- range and F330 high-range. They will reach the market later this year. Opel will also introduce three new models this year the Insignia, Zafira and Astra GTC coupe. I hope you had a chance to see them in the Opel display. Now, going forward, we're focusing on two key market segments luxury vehicles and SUVs. Not long ago, both were considered niche segments. Today they’re main stream and both are growing rapidly. According to McKinsey & Company, China could overtake the United States as early as 2016 and could overtake Europe by 2020 as the largest luxury car market. Luxury buyers here share many of the same preferences with their global counterparts but there are key differences. For example, the average luxury buyer in China is just 35 to 40 years old, that’s about 10 years younger than buyers in the US. 2 We also know that women are playing an increasingly important role. They’re buying and influencing luxury car purchases more than ever before. At last year's Beijing auto show our Chairman and CEO Dan Akerson talked about GM's ambitious plans for Cadillac. We're working closely with SGM to implement those plans. Our first step this year was to refresh our best-selling Cadillac the SRX, as I mentioned earlier. Our second step was to introduce the all- new, locally produced XTS. We are bringing Cadillac's global portfolio to China and will add one model per year through 2016. With more new models local manufacturing plus a growing dealer network, we expect to increase Cadillac sales from 30,000 units last year to 100,000 in 2015. Our longer-term goal is to take Cadillac's share of the luxury car market to 10 percent by 2020. It's no secret SUVs have become popular in China. In fact, SUV sales are expected to double by 2020 and reach 4 million units. Sales of SUVs rose more than 25 percent last year to over 2 million units. It was the fastest-growing segment in the market. SGM introduced the Buick Encore a small SUV last fall. It has already done a fantastic job attracting younger people and families to Buick. The Encore joins our other SUVs for China the Cadillac SRX and Escalade, Chevrolet Captiva, and Buick Enclave. Sales for these 5 SUVs combined in the first quarter were almost three times the number we sold in the first three months of 2012. That shows our SUVs are gaining popularity with consumers. To keep up with increasing demand, GM plans to introduce 9 new or refreshed SUVs in China in the next five years. My third major focus area is exports. We're always looking for opportunities to sell our vehicles outside China with a focus on emerging markets. Today, models from our JVs are exported as Chevrolets to 15 markets around the world spanning from South America to Egypt. Last year our JVs exported about 77,000 vehicles and we were #3 in overall China exports. The Chevrolet Sail accounted for 80 percent of these sales. In fact, the Sail was the #1 passenger vehicle export from China in 2012 and the N300 van for SGMW was the #1 export in the B-van segment. In the first three months of this year our exports are up more than 60 percent to a record 25,000 units. We should finish the year with between 100,000 and 130,000. To give you a longer-term picture, by 2015 we expect to export about 300,000 vehicles a year. Now let's move on to the second P -- plants. I'm sure you've read maybe even written that China has too much manufacturing capacity. That may be true for other automakers, but not GM. 3 Our plants are running near maximum capacity. In fact, we are adding capacity to keep up with rising demand for our vehicles. Last year, SGM opened a new plant in Yantai to build the Buick Excelle and Excelle GT. SGMW also added a new facility in Liuzhou to expand production of its Baojun passenger cars. After adding these two new facilities our manufacturing capacity increased by 20 percent this year compared to last. Between now and 2015, we'll open four more plants. Adding these four new plants will increase our domestic manufacturing capacity by 30 percent to about 5 million units. As an added benefit, the new plants will create approximately 6,000 new manufacturing jobs here in China. We also plan to continue expanding our dealer network to make it easier for our customers to buy and service their vehicles. In 2012 we added 800 new dealer points, and ended the year with 3,800. This year we will add another 400 and will have 4,200 dealer points. By 2015 we expect to have about 5,100 dealers in our network. This map shows you how we've added to our SGM dealer network across the country since 2002. Each green dot represents a dealer point. You can clearly see our westward expansion. By 2017, we plan to have 1,700 dealers in western China compared to about 1,000 today. SGM’s primary focus is on adding Buick and Chevrolet outlets in tier 3 and 4 cities. This is where we're seeing the greatest growth in market demand. Our SGMW network is also growing and moving west.