SUE YINGZI SUSenior Economist, General Motors

Inside China’s Auto Market

¶ The “China Slowdown” shocked the world this year. Vehicle sales also grew much slower than expected

¶ Yet, China auto industry remains the most important growth market in the world – Low vehicle ownership density

– Room for growth in smaller cities

¶ But, pace of auto sales will be slower than before– Slower growth in Chinese economy

– Restrictions on auto purchases and uses

INTRODUCTION

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Brazil China India Russia U.S. Rest of World

Contribution to World GDP Growth

Source: World Bank

China was the biggest growth engine for the world during the past decade

However, the Chinese economy is slowing

4

6

8

10

12

14

16

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sources: China National Bureau of Statistics

Real GDP Growth (%)

Its traditional growth model faces significant challenges

5%

15%

25%

35%

45%

2003 2005 2007 2009 2011 2013 2015

Fixed Assets Investment YTD Y/Y Change

-20%

-10%

0%

10%

20%

30%

40%

2003 2005 2007 2009 2011 2013 2015

Exports Y/Y Change

(12-mma)

-30%

-10%

10%

30%

50%

70%

2003 2005 2007 2009 2011 2013 2015

Housing StartsYTD Y/Y Change

150%

170%

190%

210%

230%

250%

270%

2003 2005 2007 2009 2011 2013 2015

Loan as % of GDP

Sources: China National Bureau of Statistics

China’s share in world commodity consumption

6

Impact of China slowdown is far-reaching

4%

6%

8%

10%

12%

14%

16%

-80%

-40%

0%

40%

80%

120%

160%

2001 2003 2005 2007 2009 2011 2013 2015

Ch

ina

Re

al

GD

P G

row

th

Co

pp

er

Pri

ce Y

/Y C

ha

ng

e

Copper Price China Real GDP Growth

Source: China National Bureau of Statistics, Wall Street Journal

Commodity prices have collapsed, one major reason why commodity-exporting countries have fallen into recessions

China’s surprising devaluation of the yuan in August panicked the global financial market

-10% -5% 0% 5% 10% 15% 20% 25% 30%

Japan: JPYEuro Zone: EUR

Switzerland: CHFPoland: PLZ

Hong Kong: HKDNorway: NOK

UK: GBPCanada: CAD

China: CNYPhilippines: PHP

Thailand: THBChile: CLP

Singapore: SGDVietnam: VND

Israel: ILSKorea: KRW

Taiwan: TWDIndia: INR

Mexico: MXNNew Zealand: NZD

Indonesia: IDRAustralia: AUDColombia: COP

Turkey: TRYRussia: RUB

South Africa: ZARMalaysia: MYR

Brazil: BRLKazakhstan: KZT

% Change versus USD since August 10, 2015

Since 8/10/2015

Appreciation Depreciation

Sources: The Wall Street Journal, Financial Times, and Haver Analytics; Calculations: General Motors Company

Source: Wall Street Journal, Dow Jones, Financial TimesNote: Data is from August 10th to September 7th, 2015

But China is transitioning from an investment/exports-driven economy to a consumption-driven one

4%

6%

8%

10%

12%

14%

16%

18%

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Year-over-Year Growth

Secondary Industry Tertiary Industry

37%

39%

41%

43%

45%

47%

49%

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Share in GDPSecondary Industry Tertiary Industry

Sources: China National Bureau of Statistics

Vehicle sales took off after China joined WTO. Total vehicle sales reached 24 million units in 2014. GM volume exceeded 3.5 million

Sources: GM Global Sales Reporting

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mil

lio

n U

nit

s

Mil

lio

n U

nit

s

Industry Sales GM Sales

China has become the largest vehicle market in the world

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mil

lio

n U

nit

s

China Europe North America All Other Markets

Source: GM Global Sales Reporting

Buick Excelle GT

Source: GM China Sales Reporting

3

Chevy Malibu

6

Buick ExcelleWuling CN100 Wuling N1

Chevy Sail

Chevy Cruze

21

7

Top 10 GM vehicles sold in China in 2014

Wuling N300

Wuling N300 Pickup

6

3

9

5

8 10

Wuling CN112

Brand Vehicle Volume

WULING CN100 470,083

WULING N1 308,645

BUICK EXCELLE 293,098

WULING CN112 279,933

CHEVROLET CRUZE 244,813

WULING N300 226,464

WULING N300 Pickup 215,489

BUICK EXCELLE GT 195,932

CHEVROLET SAIL 188,655

CHEVROLET MALIBU 125,547

Sales were slowing much more sharply than expected in 2015 till recent months

-10%

0%

10%

20%

30%

40%

50%

60%Auto Sale Growth

Source: GM Global Sales Reporting

Vehicle prices in China are falling faster this year

Sources: Cheshi.com.cn

50

60

70

80

90

100

110

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mini Small Medium High Luxury Passenger Car

SUV is the fastest growing segment

-40%

-20%

0%

20%

40%

60%

80%

100%

2012 2013 2014 2015

SUV Growth Total Market Growth

Source: GM Global Sales Reporting

Growth has shifted from the large coastal cities to smaller inner cities

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2012 2013 2014 2015H1

Growth by Tier

Tier 1 Tier 2 Tier 3 Tier 4

Source: Polk

GM’s Baojun 560 has become the second best selling SUV just several months after its debut, selling over 22,000 units in September

SHANGHAI, April 2015 – SAIC-GM-Wuling

(SGMW) today introduced its first SUV, the

Baojun 560, at Auto Shanghai 2015. The

latest Baojun model was developed by

SGMW.

The fashionable exterior of the Baojun 560 is

based on the “trendy, grand and strong”

design philosophy. A U-shaped mesh grille

complements its V-shaped air intake with a

honeycomb grid design for a dynamic effect.

A sleek beltline and strong back-end design

give it the identity of a true SUV.

With a length of 4,620 mm, width of 1,820

mm and height of 1,750 mm, the Baojun 560

has a spacious interior – true to SGMW’s

desire to offer a “home on wheels” for

families. In addition, its 2,750-mm wheelbase

is much longer than the wheelbase of most

other models in its segment. The rear seats

can be folded in a 60/40 split configuration to

accommodate larger items.Source: General Motors

A more upscale SUV, Buick Envision, is also selling very well with more than 10,000 units sold in September

SHANGHAI, March 2015 – Shanghai GM

will launch the Buick Envision 20T, the

newest member of its Envision mainstream

SUV lineup, across China in April.

The Envision 20T is powered by a 1.5T

Spark Ignition Direct Injection (SIDI) engine

that is matched with an intelligent seven-

speed DCG transmission. Like its sibling,

the Envision 28T, it is available with front-

wheel drive and intelligent all-wheel drive.

The 1.5T SIDI turbocharged engine is the

most powerful among GM's latest-

generation Ecotec small-displacement

engines. It features mid-mounted direct

injection, an integrated exhaust manifold

and QuietTuning technology. The start/stop

function, which comes standard, helps

save fuel and reduce emissions. The

engine generates maximum power of 124

kW and peak torque of 250 Nm.

Source: General Motors

Fast backward to the year 1999 when GM’s flagship vehicle was the luxurious Buick Regal, with government officials and wealthy businessmen being core customers. GM has witnessed the development of the Chinese economy and China’s vehicle market

General Motors and Shanghai Automotive Industry Corporation (SAIC) established a joint venture in 1997 called Shanghai General Motors Company Limited and began assembling the Buick Regal in Shanghai, China in 1999.The Regal has sold well in the Chinese market as a large, relatively luxurious model, despite its high price.

Source: General Motors

What’s next? Comparing to other more developed markets, China still has good potential

Sources: National Statistics Agencies, United Nations, Haver Analytics, Polk; Calculations: General Motors Company

In terms of vehicle density,developed markets aretrending at levels thatreflect market saturation

Developing Markets Have Upside Potential

Denmark

Finland

France

GermanyGreece Italy Norway

Portugal

Spain

SwedenSwitzerland

United Kingdom

Czech/Slovakia

Hungary

Poland

Turkey

Baltics

Russia

ChinaHong Kong

Taiwan

South Africa

Australia

IndiaIndonesia

Japan

Malaysia

New Zealand

Singapore

South Korea

Thailand

IsraelArgentina

BrazilChile

Canada

Mexico

United States

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100

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900

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

Ve

hic

le P

ard

Pe

r 1

,00

0 P

eo

ple

Real GDP Per Capita (2005 USD)

¶ China remains a very attractive market

¶ Will account for 40% of the projected growth in global vehicle sales over the next decade

¶ GM plans to spend over $12 billion in the next five years to expand capacity and to offer new products

¶ We are not alone. Competitors have set equally ambitious targets

SUMMARY

EVERYTHING STARTS AND ENDS WITH GREAT PRODUCTS