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Can China save General Motors?

Seven thousand miles from Detroit, GM builds a great wall of Buicks.

A laborer stands on an under-construction bridge leading to the parking lot of General Motors factory in Shanghai, May 28, 2009. (Stringer/Reuters)

BOSTON — Can things get any worse for Detroit?

First, a suspected Islamic terrorist tries to blow up an airplane over the city (with a bomb in his underwear, no less).

Then this week General Motors — the company that helped put the motor in Motor City — said sales in China surged 67 percent in 2009, even as the U.S. auto industy collapsed, further decimating Detroit's economy.

GM sold more than 1.8 million cars and trucks in China, just below what it sells in the U.S.

To rub Sichuan hot bean paste into the city's wounds, those China sales were led by Buick — a stodgy brand that, for years in the U.S. market, GM has been trying to rid of the old man smell. Even a pre-scandal Tiger Woods couldn't turn that trick: GM and Woods parted ways in 2008 after a nine-year marketing partnership that featured the young, hip and (then) wholesome golfer.

But Buick isn't the company's only happiness in China lately.

GM and its joint venture partners also saw big sales jumps in cheaper "microvans" (think really small minivans) and pick-ups, which play well in China's vast rural areas. GM now owns a 13.4 percent market share in China, the world's fastest-growing market for automobiles — not bad for a bankrupt company that took $50 billion in U.S. bailout money last year.

GM's success in the dragon is the result of several factors.

The first, of course, is China's rapid growth, which has created a large and growing army of consumers ready to get behind the wheel. Fueled by big government incentives, China's overall auto market grew a staggering 50 percent last year, for the first time dethroning the U.S. as the largest vehicle market in the world.

U.S. consumers bought 10.5 million cars and trucks in 2009. The Chinese bought 13 million. While that number is expected todrop significantly this year as Beijing's incentive programs wind down, China is now critically important for automakers worldwide.

"There's no question that China will become the world's largest auto market as long as the economy keeps growing," Kelly Sims Gallagher, a professor at Tufts University, told the Washington Post this week.

Here's why: In the U.S. there are 850 cars for every 1,000 people. In China, there are currently 35 cars per 1,000 people. That's a lot of room for growth.

Now factor in China's population of 1.3 billion people and its rapidly growing middle class, and you can see what GM, Ford, Volkswagen, Hyundai, Changan, Shanghai Automotive Industry and other global and local automakers are fighting over.

http://www.globalpost.com/dispatch/commerce/100108/general-motors-china-car-sales