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RPT-UPDATE 1-GM expects to need new China plant as sales rise

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RPT-UPDATE 1-GM expects to need new China plant as sales rise

Sun Jan 24, 2010 8:37pm EST

By Fang Yan and Edmund Klamann

SHANGHAI, Jan 23 (Reuters) - General Motors [GM.UL] expects it will need to build a new greenfield manufacturing facility in the near future in China to accommodate strong growth in the world's largest auto market, but it will not be building a plant this year, its China president said on Saturday.

The U.S. automaker sold a record 1.83 million vehicles in China in 2009, up 66.9 percent from 2008 and outpacing a 46 percent rise in the overall vehicle market, and it anticipates further growth this year.

"We expect to sell more than 2 million units this year," Kevin Wale told Reuters on the sidelines of a ceremony to launch the Buick Excelle XT in Shanghai.

GM has been adding new shifts and expanding its existing assembly lines to meet robust market demand since last year, but a greenfield plant could also be an option, Wale said.

"We have enough capacity to build the cars we need to sell this year and we need to continue to look for ways of increasing our capacity. That will mean we will have to add a new plant some time in the near future," he said.

Wale, also managing director of GM's China operations, nevertheless ruled out building a new plant this year.

"It is physically impossible to do that so quickly," he said.

The U.S. automaker makes cars, minivans and pickup trucks in China in partnership with SAIC Motor Corp (600104.SS), China's biggest automaker. It also operates a light commercial vehicle venture with FAW Group.


China has been a bright spot amid the global auto industry downturn due in large part to Beijing's stimulus measures, including aggressive tax incentives for purchases of small cars.

GM, which competes with Volkswagen AG (VOWG.DE) and others, has been a major beneficiary of those incentives, with its China vehicle sales setting fresh monthly records every month in 2009.

Industry executives and observers expect China's auto sales to continue growing at a slower though still solid pace of 10 percent this year, in part reflecting a much larger comparative base after explosive sales in 2009.

SAIC Motor aims to sell 3 million vehicles this year, its chairman Hu Maoyuan told reporters on Saturday. That represents 10.3 percent growth over 2009 when it sold 2.72 million vehicles.

GM's Buick Excelle TX sedan, priced between 134,900 and 185,900 yuan ($19,760-27,230), is the second new model the automaker has rolled out in China this month. GM has said it planned to roll out 30 new or revamped models in the country from 2009 to 2014.

Wale reiterated he remained hopeful that GM's deal to sell the Hummer SUV brand to Sichuan Tengzhong Heavy Industrial Machinery would go through, attributing the delay to Tengzhong's lack of experience in the auto industry.

GM reached the agreement with Tengzhong, a small Chinese construction machinery maker, last year, but the closing has been delayed beyond GM's initial expectations. ($1=6.827 Yuan)



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