While the General Motors Corporation (GM) is still one of the largest automobile manufacturers in
the world, recent financial woes have left the company’s future in jeopardy. Fixing GM’s domestic
operations and returning to profitability are daunting tasks that may require help from foreign
markets. China presents a potential source of sustainable future profits. Further expansion into
the rapidly growing Chinese car market is an attractive proposition, especially given GM’s strong
early mover advantage. Through numerous joint ventures with local manufacturers, GM has
established significant capabilities, both in production and sales. To maintain and expand upon its
current position in China, GM should broaden its product lineup to target three key consumer
groups: middle class car buyers, the luxury consumer, and purchasers of light and medium duty
commercial vehicles. The rise of the middle class in China is expected to fuel the rapid growth of
the Chinese automobile market, making this population especially important for GM. To encourage
these potential customers to buy from GM and promote lock in, GM must also adequately provide
two key complementary goods, automotive services and driver education. Adopting the proper
strategies in expanding into the Chinese market will help to create a large sustainable source of
profits and improve the overall health of the company.
INTRODUCTION
Current State of General Motors
General Motors has been for the past 74 years the largest automobile manufacturer in the world.
This distinction, however, has been put in serious jeopardy as industry analysts estimate that
Toyota Motor Corporation will produce more cars than GM in 2006, but losing this title is only a
small concer ...