General Motors Co. is moving in the right direction. The return of some tax dollars it was loaned by the United States and Canadian governments is a good first step.
While GM was holding the funds in escrow as an emergency reserve, the significance of the Detroit automaker returning $4.7 billion to the U.S. Treasury and $1.1 billion to Export Development Canada five years earlier than planned should not be overlooked. It will garner good will from current and potential consumers in North America and around the world. GM must now capitalize by getting consumers into its cars and trucks to see that it is building quality products.
In some places — China, for instance — that will take less convincing than in others. What is the world's largest auto market already is smitten by Buick, and GM, like other automakers, wants a larger presence there.
Vehicle sales in China totaled 13 million cars and trucks last year, compared with 10.4 million in the United States. That trend is going to continue.
GM sold 787,630 vehicles in China in 2009, making it the No. 3 foreign automaker and the No. 1 U.S. automaker there. Ford Motor Co., by comparison, sold 286,381 vehicles in China last year, says J.D. Power and Associates.
But the potential for further sales is what truly has automakers focusing on the Chinese market. Only about 18 of every 1,000 Chinese own a car. In the United States, the ratio is 750 car owners per 1,000 people.
GM will showcase its products today through May 2 at the China auto show in Beijing, which is expected to draw more than 680,000 visitors. They'll see a variety of vehicles from upstart Chinese auto companies as well as from Detroit's car companies. GM, for its part, will showcase three Buick models including the Excelle XT hatchback, Regal and LaCrosse. More than half of all of GM's sales in China last year were Buicks.
Over the next year, GM and its Chinese auto partner, Shanghai Automotive Industry Corp., will roll out 25 new or upgraded models to try to capture more of the growing Chinese market.
That's a smart move. The auto industry is global, and where money is made isn't important anymore. What matters is building good, quality products to boost sales everywhere.
When that happens, GM will become an attractive investment again and be able to rid itself of the 60.8 percent equity stake the U.S. government has in the company and the remaining $43 billion still invested in GM. While full repayment is not likely to happen anytime soon, GM has shown that it is aggressively trying to right its ship and again become a global powerhouse. That bodes well for Detroit.
REPRINTED FROM THE DETROIT NEWS
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