SUVs are keeping General Motors strong in China

By Matthew Debord

China is enduring an economic downturn, and that's rippling across the country's massive auto market. General Motors has a big China business, and prior to reporting second quarter earnings on Thursday, analysts who follow the company suggested that GM might be facing more pain that other car makers in the Middle Kingdom.

However, GM sustained relatively strong profit margins in China during the quarter , just over 10% , and saw its products positioned exactly where the Chinese want them, in terms of vehicle segments.

On a call with analysts after earnings were released, CFO Chuck Stevens said that growth in SUV sales year-over-year was in excess of 80%. Sales for the Cadillac brand were also solid. Chinese buyers want SUVs, and GM is plenty of them. The luxury market is also hanging in there for autos in China, and GM is making fairly good progress in establishing Cadillac in the mix.

The bottom line is that Wall Street was worried about GM in China. But major problems haven't materialized - yet. Both Stevens and GM CEO Mary Barra noted that China is a challenge and could become a bigger problem in the second half of the year. But as far as the vehicles GM is selling and how it's managing its China business, the company looks to have eased the investor community's worries about this large and critical market.

GM was up 6% in trading on July 24, 2015 to $32.