Despite record sales of vehicles in China, General Motors Co has posted a 14 percent drop in first-quarter profits, faced with one-off costs and weaker earnings in its core North American market.

Chairman and CEO Daniel Akerson told analysts on a conference call after Thursday's earnings release that the Detroit-based GM, which had 15.2 percent of the Chinese market during the January-March quarter, expects to invest at least $11 billion in China between 2013 and 2016, adding four assembly plants and raising capacity by 30 percent to 5 million vehicles.

It will boost capacity in the country 20 percent this year from a year ago, Akerson added.

Car industry analysts said the results again show how GM, the leading foreign automaker in China, has benefited from its investment in what has now become the world's biggest car market.

"Other Detroit manufacturers are behind the curve in the Chinese market," said Jeremy Anwyl, vice-chairman of auto industry information website Edmunds.com.

"GM stepped up and committed to expanding in China, and it's really paid off for the past several years."

Illustrating the role of China in GM's growth, Brian Johnson, Barclays Capital head of equity research for global autos and auto parts, noted that the market accounted for about 40 cents of the 58 cents-a-share profit reported for the first quarter.

He also pointed out that margins in GM's Chinese joint ventures were 11.7 percent, up from 10.2 percent in last year's first quarter. Margins in North America were about 4 percent.

GM has 12 joint ventures and two wholly owned enterprises in China.

Net income for the latest quarter was $1.2 billion, or 58 cents a share, reflecting preferred dividends. A year ago, GM's profit was $1.3 billion, or 60 cents a share.

Excluding a special loss item that reduced net income by $200 million, the results beat the forecast of analysts surveyed by data provider FactSet of 54 cents. Revenue fell 2 percent to a better-than-expected $36.9 billion.

As sales of luxury sedan and sport-utility vehicles in wealthy Chinese coastal cities slow, foreign automakers are turning their attention to western China.

They hope high-volume sales of functional sedans to less-affluent buyers will offset an expected drop in margins.

GM and its Chinese joint venture partners plan to open a $1 billion factory in the western city of Chongqing in 2015 that will produce 400,000 cars a year.

GM sold a record 816,373 vehicles in China in the last quarter, a 10 percent jump from a year ago.

As part of its effort to win over Chinese luxury-vehicle buyers who favor German brands BMW, Audi and Mercedes-Benz, the US company in February put its XTS Cadillac sedan on sale in China.

Buyers responded by snapping up more than 2,000 of the cars in March, despite the $56,000 price-tag.

GM China President Bob Ferguson has said he expects Cadillac sales in China to triple to 100,000 by 2015.

Profits in GM's international operations, including China, fell 5 percent to $495 million, and gains in China helped offset weakness in other regions, including India, GM said.

Earnings in North America fell 12.5 percent to $1.4 billion.

The company's results came a day after GM apologized and removed a Chevrolet commercial that included a song referring to "the land of Fu Manchu" where girls say "ching-ching, chop suey".

The Hong Kong-based South China Morning Post deemed the ad "racist" in a headline.

"Our intent was not to offend anyone and we're deeply sorry if anyone was offended," Ryndee Carney, a Detroit-based GM spokeswoman, told Bloomberg News.

"We're reviewing our advertising approval processes to make sure this doesn't happen again."

The English-language ad for the Chevrolet Trax SUV featured a 1920s motif and included music from Austrian performer Parov Stelar. The ad had been running on television in Canada since March and was posted to Chevy's European website.