GM Sales Up 38 Percent...in China

SHANGHAI – General Motors Corp. said Wednesday that sales in China jumped 38 percent in the first half of this year, helped by strong demand for minivans and other small vehicles.

Strong growth in China and other emerging markets is crucial for GM's recovery as it works to emerge from Chapter 11 bankruptcy protection. While GM has slashed jobs and closed factories in the U.S., it is still expanding in China.

GM sold more than 100,000 vehicles a month in China in January-June for a total of 814,442, a record for any half-year, the company said in a statement. That compares with sales of 1,094,561 GM vehicles in China for all of 2008.

The increase in sales was helped by stimulus policies, such as subsidies for replacement vehicles, and by strong growth in inland cities that have lagged behind China's wealthier coastal areas.

China's total passenger car sales surged 21 percent in January-May, to 3.36 million units, while total vehicle sales climbed 14.3 percent to 4.96 million units, according to industry figures.

Industrywide sales are forecast to top 10 million units this year. In 2008, China's auto sales grew 6.7 percent to 9.38 million units — the first time growth has fallen below 10 percent since 1999.

General Motors also said Wednesday it will suspend operations on its production lines in Russia as the deepening economic crisis squeezes Russian consumers' demand for new cars.

GM's new plant outside St. Petersburg will halt manufacturing until Aug. 31.

The company said no major layoffs will occur among the plant's 1,000 employees, though it was unclear whether that might signal smaller-scale cutbacks or unpaid furloughs.

Meanwhile, Ford shut down its St. Petersburg area factory until July 13, spokeswoman Yekaterina Kulinenko said.

Foreign auto makers had rushed to tap the country's rapidly expanding middle class after years of oil-fueled prosperity and Russia was on the way to become Europe's largest car market, with sales rising some 25 percent annually.

But the global financial crisis caused car loans and other credit to all but dry up. Rising unemployment in Russia has also helped curtail the market's rapid growth.