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 GM expects its China sales to expand 8-10 percent this year, in line
with the overall growth of the Chinese market, where foreign firms,
such as Volkswagen AG <VOWG_p.DE>, and domestic players like SAIC
Motor Corp <600104.SS> vie for more market share.
"We are investing wisely and accelerating our vehicle development
and manufacturing to keep pace with market demand. In total we are
investing $12 billion between 2014 and 2017," Matt Tsien, president
of GM China, said at the Auto China show in Beijing.
GM plans to build five more plants in China next year, as part of
its efforts to ramp up manufacturing capacity there by 65 percent by
2020, executives said on Sunday.
Rival Volkswagen's <VOWG_p.DE> early entry into China focused on
rapidly-developing eastern provinces — now it plans to push into the
west.
VW's luxury division Audi which will target smaller megacities in
central and western provinces to raise the number of dealerships by
about half to 500 in the next three years, chief executive Rupert
Stadler told Reuters.
"That's where new business is emerging, where things get rolling,"
Stadler said at the Beijing show. "We don't need more dealers in
Beijing and Shanghai."
WESTERN CITIES
China's auto market is set to expand 8-10 percent this year,
slightly slowing from 2013 when it sold 21.98 million vehicles, up
13.9 percent from a year earlier.
Vehicle density in China's smaller cities offer lucrative growth
prospects.
The average number of cars per 1,000 inhabitants in Yaan, a city of
about 2 million population in central Sichuan province is 18,
compared with 123 in first-tier coastal cities Shanghai and
Guangzhou, according to VW's website.
Parent VW was one of the first global automakers to launch
production in China during the 1980s, is evolving its operations in
the country by pushing west.
"A large sales potential for passenger cars will develop there
fairly quickly," Jochem Heizmann, head of VW's China operations told
reporters. "That's one factor driving growth besides state-induced
urbanization."
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VW, which last year opened factories in the western cities Chengdu
and Urumqi, is counting on double-digit market growth to increase
group deliveries to over 3.5 million this year, a record, from 3.27
million in 2013, CEO Martin Winterkorn said.
China's auto market rose 13.9 percent to 21.98 million vehicles last
year, compared with a 7.6 percent gain in the United States to 15.6
million.
Wolfsburg-based VW, having eclipsed General Motors <GM.N> last
year as the top-selling foreign brand in China, aims to consolidate
its lead with aggressive spending.
Its two joint venture partners, First Automotive Works <000800.SZ>
and Shanghai Volkswagen, are planning to spend 18.2 billion euros
through 2018, the year VW has pledged to take the global car-sales
crown, on models, technologies and plants.
GM's five new Chinese plants will be in Wuhan, Chongqing, Jinqiao
and Shenyang. Four of those will be vehicle assembly plants, while
the fifth one will be an engine plant in Shenyang.
The Jinqiao plant will make its flagship Cadillac sedans. GM aims to
sell 100,000 by 2015 in China, rising from roughly 50,000 last year,
executives said.
"Cadillac's growth is on the launch of new products. We launched the
XTS, which allowed us to get to the 50,000 levels. This year, we
will launch another significant product and next year, we will
launch another," GM's Tsien said.
(Reporting by Norihiko Shirouzu, Edward Taylor and Jan Schwartz in
Beijing; writing by Lee Chyen Yee and Andreas Cremer; editing by
William Hardy)
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