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Thursday, November 16, 2006

While GM Fiddles In China, Detroit Burns

Stocks: (GM)(TM)(F)

GM is boasting that its sales in China will grow 15% next year, slightly faster than the overall growth rate in the Asian country. Great.

But GM's sales in China grew over 37% in the first nine months of 2006, so the projection would appear to be a significant slowing. GM sold over 645,000 vehicles in China during that period.

None of this will matter if GM cannot improve operations in it North America operations. And, Toyota is about to see what it can do to the largest's US car company's core product line, pick-ups. Toyota is investing $1.2 billion in a new plant in Texas to build its Tundra pick-up.

Car industry analysts see Toyota's move as a way to pressure margins in the key pick-up segment of Ford and GM's sales. Pick-ups not only have large sales volumes. They also are highly profitable.

GM can do what it wants in China. Its largest rival is coming from Japan to eat its lunch in the US.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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