Q&A: Opel and Saab will remain niche brands in China

GM China boss says carmaker will add 2 more plants, announcement due in 2005

Shanghai. GM plans to build two new plants in China during the next three years to double its manufacturing capacities. Automobilwoche's Harald Hamprecht spoke to Phil Murtaugh, chairman of GM China, about unit sales targets, new plants and the potential for the Opel and Saab brands in the world's fastest growing market.

How profitable is China for GM Asia-Pacific?

We do not make statements about individual markets. However, I can confirm that we are making a profit and that we are financing our growth in China from our profits alone.

You are planning to invest more than $3 billion in China in the next three years. Is this all from profits?

We also need to use bank loans of course, but we do not need any further financial support from our parent company.

What are the detailed plans for China?

As we announced in June we will double our manufacturing capacities to 1.3 million units during the next three years and will present 20 new or restyled models.

Do you plan to introduce other brands on the market beside Buick, Chevrolet, Cadillac, Saab, Opel and Wuling?

No, currently there are no such plans. We are focusing more on entering new segments. The commercial van sector also still has a lot of expansion potential.

During the first eight months of 2004 you were the second largest player in China with a 10.1 percent market share. When will you overtake VW?

This is not our primary goal. Not least because VW is a partner of our Chinese joint venture partner SAIC. We want to grow in a profitable way instead of buying market share.

How much potential do the Opel and Saab brands have in China?

We believe that neither Saab nor Opel are volume brands but that they are attractive niche brands. Last year we sold about 2,000 Opels in ChinIn 2003, we will sell a similar number, but unit sales will also remain below the 5,000 units mark three years from now. The two brands together will be selling less than 10,000 units in 2007.

That means that your remaining brands have to grow more to make up for this. GM operates seven joint ventures in ChinHow many more will you establish?

No definite decisions have been made yet. Starting in the beginning of 2005, we will increase capacity at Shanghai GM to 450,000 units from 200,000. We are planning to increase the capacity at our SAIC-GM-Wuling plant to 336,000 vehicles from 200,000 starting in 2006. And at the same time we are evaluating a few new locations. You should assume that a new plant would bring us around 200,000 units.

Which means that you need two more plants to achieve your capacity plans?

That is right. However, we will decide on this and the locations for the new manufacturing locations together with our Chinese partners. It is very likely that we will build them where we are currently not represented, which is the north and the west of the country. We will make an announcement in good time, probably at the beginning of 2005.

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