Business

GM creates new business to import iconic cars from the US to China

GM President Mark Reuss on January 27, 2020 announces a $2.2 billion investment in automaker Detroit-Hamtramck’s Michigan assembly plant for new all-electric trucks and autonomous vehicles.

Michael Wayland/CNBC

DETROIT — General Motors is building a new premium import business in China to sell high-margin “iconic cars” from the US.

The business, which GM calls a start-up within the automaker, will focus on vehicles and potential brands that are not currently available in the Chinese market, according to GM president Mark Reuss.

“We’re going to be bringing some pretty iconic cars to China,” he told CNBC during an interview. “It’s a strategy that I think is really good, because most of the time it’s exclusively American.”

Reuss said the products will include electric vehicles as well as vehicles with conventional internal combustion engines. He declined to specify which vehicles would be part of the new business, but cited a “pretty promising Cadillac” and other SUV-like “iconic” vehicles.

“These are some iconic cars, but also some iconic brands,” Reuss said. “It’s exciting. It’s a different way of thinking about it.”

The new business is a change in GM’s strategy. The automaker has not exported many vehicles to China, which is the automaker’s largest market by volume. Instead, he localized production for China through domestic joint venture partners.

In 2021, GM did not export vehicles from the US to China, according to a company spokesperson. By comparison, GM’s total sales in China last year were 2.9 million vehicles. The company has previously imported some US-made vehicles, such as the Chevrolet Camaro, to China, but in small volumes, according to research firm LMC Automotive.

Automakers tend not to export many American-made vehicles to China because of logistics costs and tariffs that eat into profits. The top five American-made cars shipped to China were owned by German luxury car makers BMW and Mercedes-Benz, according to LMC. Collectively, there were only about 144,000 units, LMC said.

The new import business is “being built from the ground up and will enjoy a high level of autonomy,” GM said in a statement. The automaker declined to disclose other information about the business, saying “more information will be provided at a later date.”

The comments follow local Chinese media recently reporting that GM China chief Julian Blissett has confirmed plans to create a new independent premium brand in the country by importing halo cars.

Halo vehicles are often iconic products that feature unique designs and feature high-performance parts. They are used to draw attention to the nameplate or brand of the car.

Although the new business is likely to import in small volumes, such vehicles could generate significant profits for the automaker. GM’s Chinese operations earned about $1.1 billion in 2021, up $586 million from 2020, when the coronavirus pandemic hit businesses harder.

“This is Americana. It’s low volume, high margin; it’s the whole notion of a halo,” said Jeff Shuster, president of global forecasting and the Americas at LMC. “I think there’s still an aspiration to have an Americana.”

He added: “While this holds up, and again, the volumes will be small, I suspect it will be an easy game that makes sense.”


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