GM to spend $12B to jump start slowing China sales growth

Updated: 2014-05-07 10:43

By MICHAEL BARRIS in New York LI FANGFANG in Beijing(China Daily USA)

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The years of double-digit sales for automobiles in China may be vanishing in the rear view mirror, but General Motors Co is spending $12 billion to reclaim the title of the country's largest foreign automaker from German rival Volkswagen AG.

Although sales by GM and its joint-venture partners climbed 6.3 percent in April to a record 278,263 vehicles, paced by the sturdy Buick, Chevrolet, Cadillac and Wuling brands, the figures represented a 14-month low. The decline was 12.6 percent from the first quarter and 11.4 percent from April 2013.

The April industry average was forecast to be 10 percent, according to the China Passenger Car Association.

"China has been GM's largest market since 2010 - last year accounting for about one-third of our global sales,"President Dan Ammann said. He said he expects China - which is the world's largest auto market by sales - to remain GM's largest market well into the future.

Ammann said capital spending in China by GM and its joint ventures will be about $12 billion between 2014 and 2017. That will accelerate funding and capacity expansion for new product programs.

"We are counting on China for another record year in 2014, and I'm confident we can make it with strong new models,"Ammann said.

Some of the $12 billion investment will fund the launch of more than 60 new and upgraded vehicles coming to market through 2018, with the focus on meeting growing demand for luxury vehicles, SUVs, multipurpose vehicles and smaller passenger cars.

The investment also includes opening five new manufacturing plants by the end of 2015–four for vehicle assembly and one for power trains. With additional expansion on the books from 2014 to 2020, GM China's manufacturing capacity will be on track to increase by 65 percent.

Volkswagen, which last year ended GM's eight-year reign as China's largest foreign automaker, has not released April sales data. Volkwagen China CEO Jochem Heizmann has said the company "will always go faster than the industry average".

Combined China sales at Volkswagen and its two joint ventures surged 16.2 percent in 2013 to 3.27 million units, outpacing GM's 3.16 million. It was the first time that the German maker delivered more than 3 million vehicles in a single country.

In the first quarter, GM was the top seller in China, with 881,000 units. The company announced aggressive investment and growth plans at the Beijing Auto Show in April to help fuel momentum.