Lexus sinks itself
Japanese automakers saw their sales plummet after a September territorial dispute with China. The dust-up initially fueled anti-Japanese protests and dropped Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) vehicle sales almost in half. Seven months later, the automakers have yet to fully recover. They probably will by the end of 2013, but Toyota’s struggles in China will remain.
Toyota’s Lexus brand is popular in the U.S. but has had difficulty gaining traction in China. In the global picture, Toyota outsold all companies worldwide last year — yet it trailed General Motors Company (NYSE:GM), Volkswagen, Nissan and even Hyundai in China. Toyota, much like Ford, has a lot of ground to make up before it can take full advantage of China’s luxury boom.
GM for the win
With Ford and Toyota out of China’s luxury picture, the door is wide open for General Motors to take a huge chunk of the profits. Its one true rival will be Volkswagen, whose Audi brand has been a hit with the Chinese. But it helps that GM is already the top-selling automaker in China and recently announced that its sales there for January and February climbed 7.9%. It already has joint ventures if it wishes to try that route into the expanding luxury market. If not, it already sells the Cadillac brand in China.
Another thing that bodes well for General Motors Company (NYSE:GM)’s future success is its new marketing campaign. The “Find New Roads” push will replace its predecessor, which didn’t translate well internationally. The new campaign showcases a higher-quality vehicle, and its first commercial has been well received.
Early in the year, GM watched its Cadillac sales decline in China, I fully expect this trend to reverse. I think GM will continue its success in China and expand through its premium brand. Within a couple of years, we should see the effects of China’s luxury boom on GM’s bottom line. As an automotive investor, I’ll be watching GM very closely.
The article This Automaker Will Win During China’s Luxury Boom originally appeared on Fool.com and is written by Daniel Miller.
Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Ford and General Motors and owns shares of Ford.
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