Akerson: GM to hike investment, introduce new models in China
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February 15, 2011 12:00 AM

Akerson: GM to hike investment, introduce new models in China

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    MIKE MARCOTTE
    “GM will continue to make China one of our priorities,” CEO Dan Akerson said today.

    BEIJING (Bloomberg) -- General Motors Co. will boost its investments in China and introduce new models over the next two years to tap demand in the world's largest auto market, CEO Dan Akerson said.

    “GM will continue to make China one of our priorities,” Akerson told reporters in Beijing today, without giving more details about the investment plan. The automaker plans to roll out more than 20 new and upgraded models by 2012 in China, he said.

    Akerson, 62, is counting on emerging markets including China to help drive growth after an initial public offering of more than $20 billion in November. GM estimates it has a market share of almost 15 percent in China and posted record sales in the nation last month, driven by demand for its Buick Excelle and Chevrolet Sail cars.

    Going forward, GM will need to adjust its product lineup in China to compete, said analysts.

    "GM is pretty well positioned in China in terms of product portfolio and strong local partnerships, especially with SAIC," said John Zeng, an analyst with J.D. Power Asia Pacific in Shanghai.

    "But what GM may need to do is to produce sport-utility vehicles locally, as it's the fastest-growing passenger car segment in China."

    Economic growth and stimulus measures helped China's vehicle sales surge 32 percent in 2010. GM increased sales in the nation 22 percent to 268,071 vehicles in January. The company sold 2.35 million autos in the country last year, helping it narrow the gap in global sales with Toyota Motor Corp., the world's largest automaker. China has also surpassed the United States as GM's biggest market.

    GM officials also plan to explore export opportunities from China, particularly to other southeast Asian markets, South America and the Middle East.

    While the strengthening yuan makes it more expensive for automakers to ship outside of China, and cuts into the income earned from overseas markets when converted into the local currency, GM is looking at cost reductions to offset the impact.

    China joint ventures

    The automaker has a passenger-car venture in China with SAIC Motor Corp., the nation's largest domestic automaker. SAIC invested in GM's initial public offering and owns a 1 percent stake in the automaker.

    "It's in the interests of GM to buy back" SAIC's stake in GM, Tim Lee, president of international operations, said at the same briefing today.

    In China, GM also holds a 44 percent stake in SAIC-GM-Wuling Automotive Co., which sells the country's best-selling vehicle, the Wuling Sunshine minivan.

    Even as the automaker sells more cars in China than in the U.S., it earns more profit in the U.S., where it delivered 2.22 million vehicles in 2010. GM's North American operations had profit before interest and taxes of $2.13 billion in the second quarter, while the company's international operations, including China, earned $646 million.

    2010 profit

    "We hope in two weeks to report our fourth quarter," Akerson said. "I think it is fair to assume that we had a good solid profitable 2010."

    GM is scheduled to announce quarterly earnings on Feb. 25.

    The automaker will start selling its four-door Baojun 630 compact sedan early this year through the SAIC-GM-Wuling venture. The car will be available at more than 100 dealers and will target customers in smaller cities, the company said.

    SAIC-GM-Wuling is expanding its production base in the southern province of Guangxi, which will have the capacity to build 400,000 vehicles a year after completion in 2012, the company said in December.

    The U.S. automaker said Jan. 23 it signed a two-year contract worth $900 million to export vehicles and automobile parts to China.

    Akerson, a former managing director of private-equity firm Carlyle Group, said today GM had no intention to manufacture Opel vehicles in China. He succeeded Ed Whitacre as CEO in September.

    Reuters contributed to this report

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