SHANGHAI (Reuters) - General Motors Co plans to boost China sales this year by as much as 10 percent and keep pace with the country’s overall auto market for the rest of the decade, the new chief of the company’s China operations said in an interview.
Matt Tsien, a Chinese-American, engineer-turned-executive with 37 years experience with GM (GM.N), said his mandate is not to radically change direction, but instead is one of continuity in order to sustain GM’s “profitable growth” in the world’s biggest auto market.
Tsien plans to achieve the objectives in part by focusing on China’s increasing appetite for SUVs and luxury cars.
GM will also offer a range of affordable products in what Tsien described as a multilayered mega market, with maturing markets like Beijing and Shanghai and still-emerging auto demand in smaller inland cities all packed in a large geographical area roughly the size of the United States.
Tsien said GM expects China’s overall vehicle market to grow 7 percent to 10 percent this year compared with 2013, roughly in line with industry forecasts.
Last year, China’s overall sales rose 13.9 percent to 21.98 million vehicles.
In that relatively strong market environment, GM is “looking to at least track and maybe outpace (overall market growth) by a little bit,” the 53-year-old executive told Reuters.
“We feel fairly optimistic about 2014.”
Sales by GM and its joint ventures in China last year rose 11.4 percent to 3.16 million vehicles.
Tsien - named president of GM China late last year when his predecessor Bob Socia decided to retire - is the first executive of Chinese origin to lead GM’s operations here.
The automaker began developing its business aggressively in the mid-1990s when it formed a manufacturing and sales joint venture with state-owned automaker SAIC Motor Corp in Shanghai
After almost two decades, GM’s overall annual sales in China account for roughly a third of the Detroit automaker’s global volume.
During that period, Tsien was part of the team that crafted GM China’s initial five-year business plan. From 2009 through 2012, he also managed a micromini commercial vehicle division called SAIC-GM-Wuling in southern China. The division grew rapidly during that period.
Tsien said his mandate as GM’s new China chief is to “continue with our partnerships and continue with profitable growth in this country.”
Tsien said he wants GM China to grow as fast as the country’s overall market, which he said GM sees as roughly 7 percent a year to “30 million plus” vehicles by 2020.
Growth rates slumped in China in 2011 and 2012. “But the market has still got some very significant potential,” he said, suggesting annual growth of up to 7.5 percent should be “sustainable” for the rest of the decade.
To help meet its longer-term growth goals, GM will focus on what Tsien described as two high-potential segments: sport-utility vehicles of all sizes, as well as luxury cars.
GM’s premium brand Cadillac is “a little bit less well-known” in China, he admitted, but sales have begun perking up with new models and beefed-up sales channels.
Cadillac sales last year grew 67 percent to 50,000 cars, and GM has said it aims to boost its market share of the luxury segment to 10 percent from the current 3 percent.
Many local and global automakers are stressing SUVs in expectation that sales of these vehicles will double by 2020 to 4 million.
The focus on SUVs and luxury cars does not mean, however, that GM will take its eye off of affordable no-frills vehicles, Tsien said, an area where GM has developed a significant position in the past decade.
For GM, the segment includes commercial vans and small cars from SAIC-GM-Wuling, which are sold under brand names Wuling and Baojun, and entry-level small sedans and hatchbacks offered by Chevrolet.
SAIC-GM-Wuling last year sold 1.58 million vehicles, accounting for half of GM’s overall volume in China.
These vehicles are purchased by consumers who tend to live in less developed lower-tier cities across China and are only now emerging as middle-class buyers, in many cases buying autos that cost around 30,000 yuan ($4,900).
Tsien said GM plans to introduce more affordable-entry models under Chevrolet, Wuling and Baojun this year and beyond. It will also expand the vehicle range offered by its second China joint venture with state-owned FAW Motors Group, which currently produces and sells pickup trucks and bigger so-called light-duty trucks.
Developing truck-based SUV models for the FAW-GM joint venture, for instance, was “potentially possible,” Tsien said.
Madagascar-born Tsien joined GM in 1976. He completed an undergraduate electrical engineering degree in 1981 at General Motors Institute, a university in Flint, Michigan, which is now known as Kettering University, and a master’s degree in electrical engineering at Stanford University in 1982.
He brings a bilingual and bicultural background to his new role.
“It’s not necessarily a criteria,” he said. “But my bi-lingual capability obviously makes it a lot easier from a communication standpoint. And the fact that I have lived and grown in both cultures helps me understand and relate to both perspectives a little better, so it helps me communicate to our stakeholders in Detroit better… it also helps me explain to our partners and colleagues in China” GM perspectives.
Editing by Neil Fullick