SHANGHAI • A decade ago, this city had five car dealerships selling Buicks, the top-selling General Motors brand in China. Today it has 27.
And the crowds of shoppers that fill many of them are young, ready to pay cash and not inclined to haggle over the sticker price.
As GM prepares a public stock offering later this year, China is emerging as a crucial piece of its appeal to potential investors — and a surprising down payment of sorts for American taxpayers, who would begin shrinking their 61 percent equity stake in the company.
In the first half of this year, GM's China sales rose 48.5 percent over the same period last year, and for the first time ever, the automaker sold more vehicles in China than in the United States.
Just 13 years after entering China, GM now says the country accounts for a quarter of its global sales — blistering growth that even GM did not expect this soon.
"China's a big piece of the value of the company," said Stephen J. Girsky, GM's vice chairman for corporate strategy and business development.
"And since we pull cash out of China, it helps fund investments in other parts of the company as well."
Analysts estimate GM is worth $50 billion to $90 billion, with China accounting for about $15 billion of that total.
The U.S. government converted about $43 billion of aid to GM into its equity stake, which is expected to be sold off over time after the company is publicly traded.
A valuation above $70 billion or so would allow the government to earn a profit on its stake.
Through joint ventures with China's S.A.I.C. Motor Corp. and other local manufacturers, GM is this country's largest vehicle manufacturer, accounting for about 13 percent of the nation's fragmented car market. Its product line aims to cover the broad spectrum of needs, like the $5,000 Wuling Sunshine, a barebones minivan wildly popular in rural areas, and the luxurious Cadillacs that can be seen in the wealthy neighborhoods of Beijing.
This week, GM announced plans to create a seventh brand to sell small passenger cars. In the U.S., GM is down to just four brands, after shedding Pontiac, Saab, Saturn and Hummer during its bankruptcy.
"This is not some sort of flash-in-the-pan investment strategy," said Michael Robinet, an analyst with the research firm IHS Automotive. "During the bankruptcy process, GM China was the beacon in the night that GM always had in its back pocket, and China will be a vital cog in GM's machine going forward."
GM said it earned about $400 million from its China joint ventures in the first quarter of this year, when it earned a total of $1.2 billion outside of North America and Europe.
Its total corporate profit for the quarter was $865 million because of losses and other costs elsewhere.
The company's success in China has been helped by the fact that Chinese consumers do not have the skepticism about GM that is commonly seen in the U.S. In China, many shoppers know little about cars and go to a dealer for guidance.
"What we offer is accepted at face value," said Kevin Wale, the president of GM China. "We don't carry any baggage, basically. We get treated for what we deliver."
