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GM boosts car output in China
By Alex Frew McMillan
HONG KONG, China (CNN) -- U.S. carmaker General Motors Corp. inked a deal Friday to invest in its fourth car plant in China, the world's fastest-growing car market. GM and its local partner Shanghai Automotive Industrial Corp. will together invest $109 million to buy Yantai Bodyshop Corp. GM is paying 25 percent of the money, as is Shanghai Automotive, with their joint venture Shanghai GM buying the other 50 percent. The joint venture factory will boost GM's total production in China by a third. The Yantai plant has the capacity to make 100,000 cars a year, the same as Shanghai GM's $1.5 billion plant in Shanghai. A quick fixBut that factory is at capacity. By buying and revamping the existing plant in Yantai, a coastal city in northern Shandong province, GM will be able to ramp up output much faster than if it built a factory from scratch. The company said in a statement that it will shift full production of its Sail compact car to the Yantai plant in May. That is currently being made in Shanghai, which also produces Buick sedans and family wagons. GM said the move will free up capacity for future projects. Shanghai GM, which is selling as many cars as it can make, is expected to announce a new mid-level car model on December 26. GM also makes Chevrolet sport-utility vehicles and trucks at a factory in northeastern Shenyan province and has a 34 percent stake in a joint venture making minivans. Including Yantai, the four plants have a total capacity of 380,000 vehicles. Topping 1 million in salesYantai Bodyshop Corp. used to make cars for Daewoo Motor Co., the bankrupt Korean carmaker. GM bought most of Daewoo's operations earlier this year to form its GM-Daewoo joint venture, which is producing cars both for Korean domestic sales and for export to China. (Full story) The Chinese passenger car market topped 1 million in sales for the first time this year, with 1.02 million vehicles sold through November. That's a 55 percent leap from the same time in 2001. (Full story) German car company Volkswagen is currently the biggest overseas producer of cars in China, with 40 percent of the market. But all of the major Japanese car companies have recently penned deals to boost production, and rivals such as GM are keen to keep up. Overseas producers made 974,000 cars at joint ventures in China last year, up 51 percent over 2001.
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