GM to invest Rs 72,000 crore in China operations

General Motors has unveiled an aggressive investment and growth programme for its operations in China. As per the growth plan, GM’s China joint ventures will make capital expenditures of about $12 billion (Rs 72,480 crore) between 2014 and 2017, to step up its pace by funding facility and capacity expansion and new product programs.

Some of the $12 billion investment will fund the launch of more than 60 new and upgraded vehicles coming to market through 2018. GM’s focus will be on answering the growing demand for luxury vehicles, SUVs, multi-purpose vehicles (MPVs) and smaller passenger cars in the China market.

Speaking at Auto China 2014 in Beijing yesterday, GM president Dan Ammann said, “China has been GM’s largest market since 2010, last year accounting for about one-third of our global sales. He added that China is expected to remain the company’s largest market well into the future.

Ammann said GM and its JVs have done well as China’s auto market has continued to expand, and that GM today has an aggressive strategy for capitalizing on the abundant opportunities now and beyond 2020.

“We are counting on China for another record year in 2014 and I’m confident we can make it with strong new models like the Chevrolet Trax, next-generation Chevrolet Cruze, Cadillac CTS and Baojun 610 and 730 introduced at the show.”

This year the company is launching the new Cadillac CTS midsize luxury sedan, two new SUVs (the Chevrolet Trax and a new midsize entry from Buick), the Baojun 730 seven-seat family vehicle and 610 hatchback, upgraded versions of the Buick Enclave and GL8 as well as a next-generation Chevrolet Cruze.

Investments will include the opening of five new manufacturing facilities by the end of 2015: four vehicle assembly plants and one powertrain plant. With additional facility expansion between 2014 and 2020, GM China’s manufacturing capacity will increase by 65 percent.

GM is also continuing to expand its presence in the central and western regions of the country. These areas already represent about 45 percent of GM’s domestic sales. GM will add dealerships and manufacturing facilities in these regions, including plants in Wuhan and Chongqing by the end of 2015.

GM’s Vision 2020

• Luxury vehicles are expected to make up at least 10 percent of auto sales by 2020, and GM will add one new Cadillac per year through 2016.

• The SUV market will reach 7 million by 2020, or triple what it is today. GM will add 11 new SUVs between now and 2018.

• MPV sales will likely double to 2.8 million by 2020, from about 1.4 million last year. GM has demonstrated success in this area, with the Buick GL8 and Wuling Hongguang series and more entries to come from its other brands.

• In 2020 compact sedans will still be the most popular segment, with about 10 million annual sales. GM offers the Buick Excelle family, Chevrolet Cruze and Baojun 630 and has more new models in the segment under development.
• Within six years, replacement or repeat purchases in China could exceed two-thirds of industry demand, compared to one-third today. This trend is expected to drive demand for more diverse offerings.

To achieve this ambitious growth, GM and its JVs plan to create new vehicle technologies locally. The R&D team at GM’s Advanced Technical Centers in Shanghai recently developed the world’s first casting machine for lightweight magnesium parts, which are 30 percent lighter than aluminium parts and can improve a vehicle’s fuel economy by as much as 7 percent for every 150kg reduction in weight.

GM will also continue to strengthen its focus on innovation through its Pan Asia Technical Center (PATAC) JV, which will open a new facility in Shanghai next year, and the GM China Advanced Technical Center in Shanghai.

GM executive vice-president and GM China president Matt Tsien said: “China is an incredibly dynamic market that’s changing rapidly, and we are moving full speed ahead to keep up with it. One thing that will not change between now and 2020 is our dedication to China and to living up to our vision to design, build and sell the world’s best vehicles.”

Photograph: Dan Ammann, president of General Motors, says China is expected to remain the company’s largest market well into the future.