SHANGHAI (Reuters) - Pent-up car demand in the United States and slowing, but still growing sales in China, should soften concerns about the ability of General Motors Co (GM.N) to weather a recession, the company’s chief executive said.
CEO Daniel Akerson told Reuters in Shanghai that a recession is “hard to handicap, but clearly we’re concerned about it, as most Americans are.”
Despite slipping consumer confidence, Akerson said sales in the United States have been holding up well so far this year, with those in August gaining 18 percent from a year earlier.
“We know that the car park, or the average age of the fleet across all types and all makes in America, is at a general high, so there’s likely to be some pent-up demand,” he said after the carmaker opened a technology center in the Chinese commercial hub.
U.S. automakers posted a rise in sales in August, a month that began with a plunge on Wall Street and ended with an East Coast hurricane, but some analysts have warned that sales could flatten in the coming months because of further economic deterioration or because Japanese carmakers may try to reclaim market share they lost as a result of the March earthquake.
On China, the world’s largest auto market, Akerson said he expected the company’s vehicle sales growth to slow this year in line with the overall trend.
GM expects 5-10 percent growth in its vehicle sales by unit in China this year, down from a 28 percent rise in 2010, Akerson said.
That compares with GM’s expectation that the overall vehicle market in China will grow by about 5 percent this year, to 19-19.2 million units, GM China’s president, Kevin Wale, told reporters.
The U.S. automaker sold 2.35 million units in 2010 in China, more than the 2.2 million in its home market. However, U.S. sales have surpassed China sales so far this year.
China’s once-sizzling auto market has reverted to a more subdued growth pattern after the government ended tax incentives for small cars and subsidies for van buyers in rural areas.
Monthly car sales in May marked a turning point and declined for the first time in more than two years even though promotions and free giveaways helped draw consumers back into showrooms in the following months. They were up 7.3 percent from a year earlier in August.
Akerson, a graduate of U.S. Naval Academy who headed the global buyout operation at Carlyle Group before joining GM last year, said China will remain a driving force behind the global market.
“It’s estimated that over the next five to seven years, the overall automotive market across the entire globe could grow by 50 percent. Roughly a third of that is going to come from China. So China is critically important to our merging market,” he said.
GM and its Chinese partner SAIC Motor Corp Ltd (600104.SS) on Tuesday signed an agreement to develop and build electric vehicles in China, allowing the two to eventually offer electric vehicles that qualify for expected Chinese “green” subsidies.
“Generally it takes as much as four, five years to develop a car from the ground up. We’re hoping we can accelerate that a bit, so I’m hoping three to four years, but we’ll see how it works out,” said Akerson.
Akerson reiterated that the automaker was in talks with SAIC on buying back a 1 percent stake in their main joint venture, Shanghai GM, which GM sold to SAIC in 2009. The sale left SAIC with 51 percent of the venture.
He declined to give further details.
Industry observers and U.S. lawmakers have said that by limiting the subsidies to locally built models, the Chinese government is pressuring companies like GM to share advanced technology with Chinese partners.
Akerson said GM has never been pressured by the Chinese government to provide its technology.
Last month, GM, the biggest overseas automaker in China, rolled out the first car under its newly created Baojun brand with SAIC. [ID:nL3E7J924O]
Additional reporting by Samuel Shen; Editing by Chris Lewis and Matt Driskill