GM are ready to up their game in the Chinese market, it seems that VW and GM are limited by just one constraint in the Chinese market: Production. Lead times for GM cars are apparently running high which has lead the company to look at expanding production in the Chinese market via a new 7 billion USD factory.
General Motors Co. (GM), the worldâ€™s biggest automaker, is poised to receive approval to build a 7 billion yuan ($1.1 billion) factory in China, according to a provincial government statement.
The plant, operated by GMâ€™s passenger-car venture with SAIC Motor Corp. (600104), will have annual production capacity of 300,000 vehicles and be located in the central city of Wuhan, the Hubei Environmental Protection Bureau said on its website. Shanghai GM is satisfied with its current capacity arrangements and has yet to make a decision on building a new factory in Wuhan, said Jerry Ma, a Shanghai-based spokesman.
The statement comes less than two months after Chinaâ€™s government moved to end a seven-year policy of encouraging foreign companies to invest in the nationâ€™s carmaking industry. The factory would increase GMâ€™s passenger-vehicle capacity, estimated at 2 million units last year by research firm IHS Automotive, by about 15 percent, easing the strain on existing plants that are producing cars in excess of their normal output.
â€œGM has been running with tight capacity and the expansion will make the company even more competitive,â€ said Cao He, an analyst with China Minzu Securities Co. in Beijing. â€œTo have a foothold in central China will also bring GM closer to its clients there and lower logistic costs.â€
GM makes vehicles in the eastern province of Shandong, the southern province of Guangxi, the northeastern city of Shenyang and the eastern city of Shanghai.