General Motors reported on Monday that its car sales in China grew 12% in the third quarter ended September from the same period last year as the market continued to recover from the COVID-19 crisis.
GM (GM) and its joint ventures, including SAIC Motor Corp., delivered more than 771,400 vehicles in China in the July to September quarter compared with 713,600 vehicles in the previous quarter. The third-quarter performance marked GM’s first Chinese quarterly sales growth in 2 years, according to Reuters.
“GM brands maintained robust growth momentum as the vehicle market continued to recover from the COVID-19 impact,” GM said in a statement. “GM’s luxury vehicles, midsize/large SUVs and MPVs, led by the Cadillac XT5 and the Buick Envision and GL8 families, posted a strong performance in particular, spearheading the overall recovery.”
Cadillac deliveries topped 65,000 units in the third quarter, marking an increase of 28% from a year earlier. GM said that the SUV portfolio, which includes the XT4, XT5 and XT6 posted steady growth, with collective sales of more than 40,000 units. In July, Cadillac expanded its application of Super Cruise, a driving assistance technology, in its domestic line-up.
Sales of Buick brands grew 26% from a year earlier to over 250,000 units. Sales of the GL8 family – the long-standing leader in China’s MPV segment – increased 17% year-on-year to more than 52,000 units. In addition, the Envision family had deliveries of over 34,000 units, as sales surged 48%. The introduction of the Envision S and Envision S Avenir in July strengthened the brand’s SUV line-up in China, GM added.
Chevrolet had deliveries of more than 77,000 vehicles, while sales of no-frills brand Wulang rose 26% year-over-year to more than 270,000 units. GM said that its first all-electric model – the Hong Guang MINI EV introduced in July – has become the best-selling new energy vehicle (NEV) model in China. Deliveries in the third quarter topped 28,000 units.
GM has this year been accelerating the rollout of NEVs across its brands in China, which the automaker earmarked as a pivotal market for its zero-emissions mission. NEV sales more than doubled in the first nine months from a year earlier. GM said it has already exceeded its plan of introducing 10 NEVs between 2016 and 2020, including the Buick VELITE 7 all-electric SUV, VELITE 6 plug-in hybrid electric vehicle (PHEV) and Wuling Hong Guang MINI EV. In the next 5 years, the Detroit-based automaker, plans for more than 40% of GM’s new launches in China to be NEVs.
Shares in GM have been hit hard and are still down about 12% year-to-date with the $38.46 average price target suggesting that analysts expect the stock to advance almost 20% in the coming year.
Merrill Lynch analyst John Murphy last week reiterated a Buy rating on the stock with a promising $60 price target (87% upside potential) as the analyst shed light on how he expects the upcoming US elections to impact the country’s auto industry.
“In an election outcome of a Biden presidency but a split Congress, we would anticipate an initially positive reaction for automotive stocks, as the likelihood of policy standstill mitigates risk of bottom line impediments, while the new administration could provide greater stability and predictability that would support companies’ longer-term decision-making,” Murphy wrote in a note to investors.
Overall, Wall Street analysts are cautiously optimistic on the stock. The Moderate Buy consensus is based on 10 Buys versus 3 Holds and 1 Sell. (See GM stock analysis on TipRanks).