GM to Build New Minivan Manufacturing Base in China
11/28/2012| 09:03pm US/Eastern
SHANGHAI--General Motors Co.'s (>> General Motors Company) minivan joint venture in China plans to build a third manufacturing base to raise capacity, in spite of slower growth in the country's low-cost minivan segment.
SAIC-GM-Wuling Automobile Co. will site the new manufacturing base in the southwestern Chinese city of Chongqing, which will have an annual manufacturing capacity of 400,000 units and is scheduled to start production in 2015, GM said in a statement.
The U.S. car maker, China's largest auto group SAIC Motor Corp. (>> SAIC Motor Corporation Limited) and Liuzhou Wuling Motors Co., will invest 6.6 billion yuan (US$1.1 billion) in the first phase of construction of the base.
"It will enable SGMW to reach its production target of 2 million minivans per year by the end of 2015," GM said in the statement, without elaborating which models will be built at the new base.
Established in 2002, SAIC-GM-Wuling has focused on making low-cost minivans and commercial vehicles, which are popular in China's rural areas. The largest minivan maker by sales on the mainland currently operates manufacturing bases in the southwestern city of Liuzhou and the eastern coastal city of Qingdao.
Overall sales at SAIC-GM-Wuling rose 13% to 1.21 million units in the January-October period, outperforming any of GM's joint ventures in China. SAIC-GM-Wuling said it expects to record sales of more than 1.4 million units this year.
To maintain its leading position in China's minivan segment, SAIC-GM-Wuling earlier this month opened a new manufacturing plant in Liuzhou to produce such vehicles under the Baojun brand.
GM's planned expansion is in stark contrast to a sharp slowdown in the broader minivan market in China, which has been adversely affected by the removal of government subsidies.
In 2011, sales of minivans in China fell 9.4%, compared with double-digit growth in the previous two years. In the first 10 months of this year, nationwide sales of minivans slid 0.2%.
In China, GM has two other joint ventures: Shanghai General Motors Corp., its joint venture with SAIC, and FAW-GM Light Duty Commercial Vehicle Co., its joint venture with FAW Car Co.
Write to Rose Yu at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires