General Motors’ top executive in China, Phil Murtaugh, has left the company amid declining sales, the company reportedly said on Wednesday.
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Citing a GM statement, the Associated Press (AP) said 50-year-old Murtaugh resigned for personal reasons after nearly five years as chairman and managing director of GM’s China Group.
“Details of Murtaugh’s replacement are being finalized and an announcement is pending,” the company reportedly said in the statement.
GM’s spokeswoman in Shanghai, Daphne Zheng, told AP Murtaugh’s departure after 32 years with the company was not related to a recent slowdown in its China sales.
“Sales keep performing to our expectations and we expect double-digit growth this year,” Zheng reportedly said.
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By GlobalDataAccording to the report, Murtaugh oversaw explosive growth at GM’s China operations and played a key role in the launch of Shanghai GM, the company’s biggest mainland venture – he was also responsible for Taiwan.
AP noted that GM shocked investors by warning that it would post a substantial loss in the first quarter of this year and by slashing its 2005 profit outlook to less than half earlier forecasts – it is threatened with a possible downgrade in its credit rating to junk-level status.
The company has pointed to China as a success story, the Associated Press added – sales at GM’s flagship joint venture with Shanghai Automotive, or SAIC, and a separate joint venture with SAIC and Wuling Automotive climbed 27% year-on-year to nearly 500,000 vehicles last year, a market share of more than 9%, and GM forecasts double-digit growth in sales for this year, too.
Noting that China has become the world’s fastest-growing auto market as families with rising incomes swap bicycles and scooters for cars, AP added that GM, like other automakers, has seen growth in sales slow sharply due to rising competition and efforts by the Chinese government to slow economic growth.
Passenger car makers saw their profits plunge by 78.4% in the first two months of 2005, compared with the same period a year ago, as rising prices for raw materials such as steel raised production costs while prices fell, the report said, adding that sales in January and February were down 5.9% compared with the same period a year earlier.
Zheng reportedly attributed that decline to a change in GM’s product lineup as sales of the popular [Opel Corsa-based] Buick Sail [sedan] were discontinued in a switch to new Chevrolet models.
However, analysts have told the Associated Press that a lower level of growth industry-wide is inevitable given recent sizzling growth in vehicle sales, which rose 15% year-on-year in 2004 and 75% the year before – first quarter sales also tend to be slower as potential buyers wait for price adjustments.
AP said Murtaugh was credited with cultivating close ties with GM’s state-owned partner, SAIC, having earlier served as executive vice president of Shanghai GM and general manager of GM China’s Shanghai representative office.
“During Murtaugh’s tenure, GM underwent an aggressive expansion of its product lineup, manufacturing capacity and research and product development capability,” the company said, according to the report.
According to the Associated Press, Murtaugh recently expressed confidence in China’s growth potential, describing the slowdown in sales as a shift to “steady and sustained growth.”
