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GM sees solid China growth; mulls capacity boost

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GM sees solid China growth; mulls capacity boost

September 17, 2010 06:01 CET

CHENGDU, China (Reuters) -- General Motors Co. aims to sell at least 10 percent to 15 percent more vehicles in China next year, as growth in the world's biggest auto market is expected to return to a more rational trend after breakneck expansion, its China chief said.

GM, which operates auto ventures with major Chinese auto groups SAIC Motor Corp. and FAW Group, is on track to achieve its target to sell more than 2 million vehicles in the country this year, Kevin Wale, president and managing director of GM's China operations, told Reuters.

"The market is still quite solid. As you know this year is going to be a strong year. We will see continued growth next year, but growing at a range between 10 to 15 percent," Wale said on the sidelines of an industry forum late on Thursday.

"Our strategy always is trying to grow at least with the market. If we can do a little better, that's good," Wale said.

China has been a major bright spot amid a global industry still struggling to recover from a steep downturn.

But auto sales, which jumped more than 50 percent in 2009 from a year earlier, have been slowing down since May as Beijing tapped on the brakes to keep its economy from overheating.

Many industry executives expect the market to resume its normal growth patten after fast expansion since last year.

Still, Wale sees the need to continue growing capacity at its China joint ventures and a greenfield plant is always an option, he added.

"When you're selling about 2 million units a year, a 10 or 15 percent growth is a new assembly plant."

The Detroit automaker expects to sell more than 3 million vehicles annually in 2015 in China, which had surpassed the United States as its largest market in the first half.

Other foreign automakers are also adding capacity in the country.

GM rival Ford Motor Co. is building a $490 million new China plant which is expected to start making its next-generation Focus sedan in 2012. PSA/Peugeot Citroen SA is on track to add its third China plant with its partner Dongfeng Motor Group.

Growth in small cities

GM, which has been a major player in the lucrative medium-to-higher-end market segment, rolled out its new Sail under the Chevrolet brand in January, targeting smaller cities, which many say will replace affluent cities in the east coast as the major growth driver in the next few years.

Wale said he is encouraged by the new Sail, which has reached a volume of nearly 60,000 units so far.

GM will continue to roll out products for the high-volume but competitive low-end market and expand its dealer network in inland China, he said.

"We think we understand the trend," Wale said. "We think are well placed and have been busy expanding in these tier 3 and tier 4 cities."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100917/ANE/309179993/1131#ixzz0znUc9jUz

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