Why is GM Falling Behind in China?

General Motors’ (NYSE:GM) sales in China were up just 1.7 percent last month despite plunging sales there from Japanese rivals, while European and South Korean auto makers seemed to reap all the benefits from growing anti-Japanese sentiment in the country.

Deliveries of GM’s Wuling micro vans, a brand that accounts for nearly half of the company’s sales in China, came to 119,510 in September, up just 0.4 percent from the year-earlier period, as a weakening Chinese economy hurt small business owners, the Wuling’s key buyers. Meanwhile, sales of its car venture with SAIC Motor Corp. rose 3.7 percent, compared with a 17.4 percent increase in September 2011.

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Toyota (NYSE:TM), Honda (NYSE:HMC), and Nissan sales in China have plummeted since protests erupted last month over the Japanese government’s purchase of a group of disputed islands in the East China Sea. Toyota’s sales in China fell 40 percent in September from a year earlier, while Mazdasales were down 35 percent.

BMW, on the other hand, boosted its sales in China by 55 percent last month. Audi sales were up 20 percent, and Mercedes-Benz sales rose 10 percent.

In the first nine months of 2012, GM’s sales in China were up 10 percent, which means sales growth in September actually fell short of its average so far this year. The company may have benefited from a stronger SUV lineup, which helps make German and Korean companies more competitive in China, according to John Zeng, Asia Pacific director for industry consultancy LMC Automotive.

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