GM Planning $3B Investment in China

SHANGHAI-General Motors says pending government approval it will invest upward of $3 billion in its operations in China during the next 36 months as it seeks to increase its market share in the world’s fastest growing vehicle market. The investment will include the construction of new facilities at GM’s local engineering and design center, expanding capacity at existing manufacturing facilities and the launch of a new financing joint venture.At its Pan Asia Technical Automotive Center in Shanghai, GM and strategic partner Shanghai Automotive Industry Corp., China’s leading sedan manufacturer, plan to develop the a virtual reality prototype design laboratory that will be the first of its kind in China, as well as a noise, vibration and harshness test lab and a kinetics and compliance lab. CM China Group CEO Phil Murtaugh says the investment will make PATAC the most advanced and complete engineering and design center in China, helping ensure that the company “maintains its leadership position” in automotive engineering and design for the China market.In order to support the introduction of some 20 new and upgraded products over the next three years — including intermediate and luxury vehicles, where it does not currently compete — GM expects to more than double its vehicle assembly capacity in China to 1.3 million units by 2007. The new capacity will be realized through the expansion of its existing plants as well as the construction of new facilities. At present, GM’s joint ventures in China have a combined designed annual capacity of 530,000 units. GM is also planning a new transmission manufacturing plant, but a location has not yet been announced.Additionally, is appears GM will be selling financing as well as autos to the Chinese. General Motors Acceptance Corporation and its partner Shanghai Automotive Industry Corp. recently received approval from the China Banking Regulatory Commission for their application to establish a new financing joint venture. The partners are now applying for an official business license from the commission. If approved, GMAC-SAIC Auto Finance Company Ltd. would become China’s first foreign automotive financing joint venture. In the first four months of this year, GM and its joint ventures sold approximately 178,000 vehicles in mainland China, representing year-on-year growth of 56%. GM says it currently has second-highest market share among global automakers in China.Murtaugh says the new investments will enable GM to “maintain its leadership position by growing with the market.”