Weaker Economy and Trade War Damp General Motors China Sales

(Bloomberg) -- General Motors Co. has fallen prey to a slowing Chinese economy amid a worsening trade war with the U.S.

The largest U.S. carmaker on Monday posted a 15 percent drop in deliveries in China for the three months ended Sept. 30, its first quarterly report since the trade dispute began escalating in July. The automaker’s sales in China fell 2.5 percent in the first nine months of this year, GM said in a statement.

Slower economic growth and a trade dispute with the U.S. that has intensified in the past few months are threatening to put the brakes on a near-three-decade growth in China’s vehicle sales. GM is mainly losing market share to Japanese automakers, especially in compact sedans and sport utility vehicles, said Yale Zhang, an analyst with Automotive Foresight Co. in Shanghai.

Among GM nameplates, Buick and Baojun models posted the biggest sales drops, respectively falling 19 percent and 24 percent during the third quarter.

“This cannot be attributed to just one factor,” Bill Russo, chief executive officer of Shanghai-based advisory firm Automobility Ltd., said in a WeChat message. “It’s a combination of a slowing economy, the availability of alternatives to new-car purchases to address mobility needs” as well as shifting consumer brand preferences as a reflection of weaker sentiment toward U.S. brands due to the trade war, he said.

The declines come amid a recall of more than 3.3 million Buick, Chevrolet and Cadillac vehicles in China due to system defects.

U.S. brands’ market share narrowed to 10.7 percent in the first eight months of 2018, from 12.2 percent a year earlier, according to the China Association of Automobile Manufacturers.

To contact Bloomberg News staff for this story: Yan Zhang in Beijing at yzhang1044@bloomberg.net

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With assistance from Editorial Board