GM's Chinese minivan venture buys factory

Production capacity to increase by 70,000

June 03, 2005|By BLOOMBERG NEWS

SHANGHAI, China - General Motors Corp., the world's biggest automaker, said yesterday that its minivan venture in China has acquired an automaking plant that will increase its annual vehicle production capacity by 70,000.

SAIC-GM-Wuling Automobile Co. bought Estong (Qingdao) Vehicle Manufacturing Co. for an undisclosed sum, GM China said in an e-mail statement.

The GM venture, based in the southern city of Liuzhou, will shift some of its production to the acquired plant in the eastern city of Qingdao and might start production there in the second half of this year.

General Motors is investing in China, the company's most profitable major overseas market, to expand market share, which rose to a record 10.4 percent in the first quarter. The automaker is competing with Germany's Volkswagen AG and Japan's Toyota Motor Corp. to sell more cars in the world's third-largest vehicle market.

SAIC-GM-Wuling's annual production capacity is 300,000 vehicles, the statement said. The venture also started construction of a 3.2 billion yuan ($386 million) engine plant in Liuzhou.

The new plant could begin making 1.1-liter and 1.2-liter engines in 2007. Production capacity might be increased to 500,000 engines a year, the statement said.

General Motors announced last year a $3 billion investment plan to more than double its production capacity in China to 1.3 million vehicles in 2007. The company has four manufacturing ventures in China, making Buick sedans, GL8 vans, Chevrolet Spark minicars and other models.

Estong Vehicle was set up in 1997 by a Chinese tobacco company. The unit briefly made vehicles at the plant from 2001, before production was discontinued, GM's statement said.

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