GM Plans to Boost Production in China
General Motors Corp. said Monday that it planned to spend $3 billion with its partners to more than double production in China in the next three years.
The automaker, which has invested more than $1.6 billion in China, will seek government approval to expand its four ventures to make 1.3 million units in 2007, from about 530,000 units this year. It plans to introduce 20 new models, build a transmission factory and boost engine production.
“Success in China is crucial to GM’s global success,” Phil Murtaugh, chairman and chief executive of General Motors China, said in Beijing. The Detroit-based automaker’s profit from China last year more than tripled to $437 million, and the nation may be GM’s second-biggest market within two years.
General Motors, Ford Motor Co., Volkswagen and Toyota Motor Corp. have announced plans in the last eight months to invest about $10 billion in China, which is the world’s third-largest vehicle market. They are benefiting from a new automotive policy that bans lending to unauthorized projects and encourages larger carmakers to expand through mergers.
China’s vehicle market ranks behind those of the U.S. and Japan. The country may overtake Japan in the next two years to become the world’s second-biggest market, Murtaugh said.
The country’s vehicle ownership rate of 16 cars and light passenger trucks per 1,000 people compares with about 700 per 1,000 people in the U.S., 598 in Japan and 91 per 1,000 in Thailand, according to estimates from Lexington, Mass.-based consulting company Global Insight.
Overseas automakers have invested an estimated $30 billion in China since the 1980s. Manufacturers are scrambling to make enough vehicles to meet demand after last year’s 76% surge in sales.
In the first four months of this year, General Motors and its joint ventures sold about 178,000 vehicles in mainland China, 56% more than a year earlier, the company said. The company sold 8.56 million vehicles worldwide last year.
Shanghai GM, which makes Buick Regal, Sail, Excelle and other models in a venture with Shanghai Automotive Industry Corp., is scheduled to expand to 450,000 units by 2005 from about 200,000, the automaker said.
GM also will start production of unspecified models this year at the former Jinbei General Motors Automotive Co. in Shenyang, Liaoning.
SAIC-GM-Wuling, GM’s mini-vehicle venture with Shanghai Automotive and Wuling Automotive, is expanding its manufacturing capacity to 336,000 vehicles a year from 200,000, including the addition of Cadillac models at the plant. The plant expansion is scheduled to start production in 2006.
GM will expand the engine plant at Shanghai GM and build an engine factory and a transmission plant at SAIC-GM-Wuling in Guangxi.
GM rose 89 cents to $47.11 on the New York Stock Exchange.
