General Motors (GM) has witnessed a staggering 67% rise in sales to 1.8 million vehicles in 2009, driven by Government incentives including tax cuts and subsidies.

GM has revealed that its joint venture with Shanghai Automotive Industries Corp. (SAIC) has shown a sales rise of 63.3% to 727,620 units. Further, the automaker’s joint venture with SAIC and Wuling became China’s first automaker to exceed 1 million units in annual sales in 2009. Sales in SAIC-GM-Wuling joint venture rose 63.9% to 1.06 million vehicles.

The Chinese auto industry has been the apple of Beijing’s eye, basking in incentives for car owners to shift to more environment-friendly and fuel-efficient cars. Although the domestic automakers (especially small car manufacturers) received most of the incentives, foreign automakers benefited from them as well.

The collapse in the U.S. auto industry in 2009 was somewhat offset by the surging sales in China, making a stark shift in global vehicle volumes that was much quicker than anyone had expected. All these have led several global automakers, including GM, to strengthen their foothold in China’s fast-growing market in order to drive sales amid slack demand elsewhere.

In 2009, GM’s corporate operations in China saw a rapid expansion. The company launched a ground-breaking science laboratory and a vehicle safety research center in the country. GM also plans to expand in other parts of Asia with the help of Chinese automakers. Its joint venture with SAIC has announced to launch a new venture in India to produce and sell cars.

Zacks Investment Research