GM May Almost Double China Output by 2010 on Demand

18 Apr 2007 • by Natalie Aster

General Motors Corp., the largest overseas automaker in China, may almost double its production in the country to 1.7 million vehicles a year by 2010 to keep pace with growing demand, reported The Bloomberg.

Shanghai General Motors Co., the automaker's largest China venture, will likely double output to 1 million vehicles a year by adding shifts and modifying plants, said Julian Blissett, the venture's deputy executive director, in the city yesterday. A separate minivan and minicar venture could raise capacity to 700,000 vehicles from about 400,000, added Kevin Wale, chairman of GM's China unit.

``The plan is bold and aggressive,'' said Michael Dunne, managing director of JD Power & Associates, in a phone interview from Shanghai today. ``It's more and more difficult for any company to expand its market share in China, given more participants in the market.''

The Detroit-based automaker is targeting China and other emerging markets as it seeks a return to profit after losing $12 billion over the past two years. GM aims to sell 1 million vehicles a year in China by next year at the latest, Wale said in January. It plans about $1 billion a year in capital spending and research and development in the country.

One million passenger cars will represent a 14 percent market share in 2010, when China's overall sales may reach 7 million, according to Dunne. GM now accounts for about 10 percent of the market, he said.

SAIC-GM-Wuling Automobile Co., the minivan venture, could expand further if needed, said Thomas Drumgoole, its chief financial officer, today in Liuzhou, Southern China.

GM aims to raise sales in China, its largest overseas market, as increasing competition squeezes margins. Automobile prices fell as much as 7 percent in the country in the first quarter, according to Wale.

GM's China sales rose 32 percent last year to 876,747 vehicles. That compares with about 6,000 in 1997, Wale said. The country wasn't among GM's 10 biggest markets five years ago. It was the second-largest last year, behind the U.S.

China's economy has grown by an average of about 9 percent a year for the past decade, making vehicle ownership affordable to more people. GM, Volkswagen AG and other automakers sold 25 percent more vehicles in China last year, as sales in the country surpassed Japan's for the first time.

GM plans to introduce seven or eight new models in China this year among 52 new models and 88 revamped ones expected to go on sale in the country. SAIC Motor Corp., China's largest carmaker, is a partner in both GM ventures.

Automakers may sell 8.5 million vehicles in China this year, compared with 7.22 million last year, the China Association of Automobile Manufacturers said on Jan. 22.