Chairman of GM China Unit Resigns Amid Sales Slump

Philip Murtaugh, who set up General Motors Corp.’s most profitable overseas venture, quit as chairman of the company’s China unit after less than five years in the job, according to people familiar with his resignation.

Murtaugh resigned for undisclosed personal reasons, said the sources, who declined to give their names. Troy Clarke, the carmaker’s Asia-Pacific president, will oversee GM’s four manufacturing ventures in China with the country’s largest carmaker, Shanghai Automotive Industry Corp., until a replacement is found, they said.

The departure comes as GM faces cooling sales in China, falling market share in North America and rising debt costs as its credit rating hovers near non-investment grade. Rick Wagoner, GM’s chief executive, this month said GM would post its biggest quarterly loss in 13 years and forecast that full-year profit would fall by more than half.

“China is still a profitable market for GM, but it’s been cooling off, for them as well as for everyone else,” Burnham Securities analyst David Healy in New York said Tuesday. “I don’t know whether his departure is a black eye for them, since the company is already pretty black and blue.”

Detroit-based GM, with more than $2 billion invested in China since 1997, has chipped away at Volkswagen’s domination of the country’s passenger car market. GM had 10% of China’s car sales last year, while Volkswagen’s market share fell to 26% from 54% in 2000.

Murtaugh didn’t answer phone calls Tuesday. GM’s Shanghai-based spokeswoman declined to comment.

Shanghai General Motors, GM’s venture with Shanghai Auto, sold 252,869 vehicles last year in China. Profit from China contributed about 25% of GM’s total earnings in 2004, according to Healy’s estimate.