April 20, 2013 01:00 AM

GM plans to add four more plants in China

Investments will boost capacity by 30% to 5 million units annually

Bernie Woodall

SHANGHAI (Reuters) -- General Motors Co. plans to add four new plants in the next three years in China to bring its production capacity to 5 million vehicles a year, the head of GM China said at the Shanghai auto show.

Bob Socia, head of GM China, said on Saturday that the company and its joint venture partners will invest $11 billion in China by 2016, but did not break out the cost of the new plants.

The new plants will boost GM's manufacturing capacity by 30 percent and create 6,000 jobs, the company said.

GM also plans 17 new or refreshed models in China this year.

The company is adding another 400 dealers in China this year, which will bring its dealership network to 4,200 stores. By 2015, GM said it expects to have about 5,100 dealers in China.

"We are at an important point in our history and the industry's history in China," Socia said in a statement. "Last year, the vehicle market reached a record 19.4 million units. We expect industry sales to grow another 7-8 percent in 2013."

No overcapacity risk

Socia said auto executives and industry insiders often talk of the danger of production overcapacity but that is not the case at GM. Its plants are running near maximum capacity, he said.

"We're confident about playing here in China," Socia told reporters. "We're here for the long term."

When GM plant capacity increases to 5 million in 2015, the company will export about 300,000 vehicles, Socia said, up from over 100,000 GM expects to export this year.

Socia said there is a chance that GM will export vehicles to the United States from China, but he did not reveal any plans.

"That could very well happen," Socia said of the chance that exports to the U.S. market may occur.

Philip Nussel of Automotive News contributed to this report.

PRESS RELEASE: General Motors Announces Future Plans in China Focused on products, plants and people

2013-04-20

SHANGHAI – General Motors discussed its future plans in China during a press conference it hosted this evening in conjunction with the start of Auto Shanghai 2013.

"We are at an important point in our history and the industry's history in China," said Bob Socia, President, GM China, and Chief Country Operations Officer, China, India and ASEAN. "Last year, the vehicle market reached a record 19.4 million units. We expect industry sales to grow another 7-8 percent in 2013."

GM has been the sales leader among global automakers in China for the past eight consecutive years. He said GM would sell its 1 millionth vehicle in China this weekend – the earliest it has ever done this in a calendar year.

According to Socia, one of the factors in GM's success in China has been its aggressive investment in products, plants and people.

Products

GM and its joint ventures are adding to their product lineups by launching 17 new and upgraded models in China this year. They include the Chevrolet Cruze hatchback; the new Wuling Sunshine; two new Jiefang light-duty trucks, the S230 and F330; and the Insignia Sports Tourer, Zafira Tourer and Astra GTC from Opel.

"Our focus is on luxury vehicles and SUVs going forward," said Socia. "Not long ago, both were considered niche segments. Both are now mainstream and growing rapidly."

GM is in the process of bringing Cadillac's entire global portfolio to China, adding one locally produced model per year through 2016. Earlier this year, it introduced the locally produced XTS luxury sedan as well as the refreshed SRX luxury SUV, which is Cadillac's best-selling model in China.

With more new models, the expansion of its local manufacturing capability and a growing dealer network, GM expects to increase Cadillac sales from 30,000 units last year to 100,000 units in 2015. Its longer-term goal is to take Cadillac's share of China's luxury car market to 10 percent by 2020.

GM currently offers five SUVs in China: the Buick Encore and Enclave, Cadillac SRX and Escalade, and Chevrolet Captiva. It plans to introduce another nine new or refreshed SUVs in China within the next five years.

In addition, GM is looking beyond China's borders to sell its locally produced vehicles. This year, GM expects to export a record 100,000-130,000 vehicles.

Plants

GM's manufacturing facilities in China are running at near maximum capacity. GM continues to add capacity to keep up with the rising demand for its products.

In 2012, GM's joint ventures opened two new manufacturing plants. They will open four additional plants in China through 2015. This will enable GM to increase its domestic manufacturing capacity by 30 percent to about 5 million units annually. It will also create approximately 6,000 new manufacturing jobs.

GM is expanding its dealer network to make it easier for its customers in China to buy and service their vehicles. It is adding 400 dealers in 2013 alone, which will give it 4,200 dealers at year end. By 2015, GM anticipates having about 5,100 dealers nationwide. GM's dealership focus is on expanding westward and to China's tier 3 and tier 4 cities in the country's interior. Shanghai GM and SAIC-GM-Wuling will open a total of 1,000 dealers in western China by 2017.

People

"GM is a car company, but we are also a people company," said Socia. "You can't build great vehicles without great talent."

GM and its joint ventures now have more than 55,000 employees across China, a number that has more than doubled since 2004. GM continues to hire local talent, with a focus on design, engineering, R&D, manufacturing, purchasing, and sales and marketing.

Socia summed up GM's plans for the future in its largest market: "With the support of our great partners and by focusing on our products, plants and people, GM looks forward to remaining a leader in China."

About GM

General Motors traces its roots back to 1908. GM has 12 joint ventures, two wholly owned foreign enterprises and more than 55,000 employees in China. GM and its joint ventures offer the broadest lineup of vehicles and brands among automakers in China. Passenger cars and commercial vehicles are sold under the Baojun, Buick, Cadillac, Chevrolet, Jiefang, Opel and Wuling brands. In 2012, GM sold more than 2.8 million vehicles in China. It has been the sales leader among global automakers in the market for eight consecutive years. More information on General Motors in China can be found at GM Media Online.