GM to pump $12 billion into China, hike capacity 65% by 2020
General Motors, undeterred by slowing growth in China, announced plans to plow $12 billion into the country by 2017 and boost vehicle manufacturing capacity 65 percent by 2020.
The plan, unveiled Sunday at the Beijing auto show, will partly target expanding GM's SUV, crossover and luxury car offerings in China. All three segments are projected to continue to grow, GM says.
"We are investing wisely and accelerating our vehicle development and manufacturing capacity so that we may keep pace with the market demand," GM China President Matt Tsien said.
GM's aggressive plans come as the growth in China auto sales cools to single digit rates after years of double-digit expansion. The market for light vehicles grew 15 percent in 2013, according to IHS Automotive. But growth will inch along below 10 percent in coming years, slowing to 2.5 percent by 2020, IHS predicts.
GM expects the China market to grow 8 percent to 24 million vehicles this year. GM projects the overall China market will reach 33 million to 35 million new units annually by 2020, an increase from roughly 22.2 million vehicles in 2013.
That level of volume will be double the size of projected total U.S. demand in 2020, GM President Dan Ammann said.
To keep up, GM will invest $12 billion in China between 2014 and 2017. The goal is to boost capacity 65 percent by 2020.
China's No. 2 manufacturer by sales already has four new plants under construction that will open by the end of 2015, boosting capacity to 5 million units from around 3 million units today.
Ammann called the 2020 capacity expansion a soft target, and declined to give a long-range capacity figure or say how many additional factories GM would need to achieve such output.
GM is prepared to adjust plans for additional China capacity according to market trends, he said.
A 65 percent expansion over 5 million units would put GM's capacity in the neighborhood of 8 million vehicles.
The product expansion entails the introduction of 60 new or refreshed vehicles in 2014 through 2018, Tsien said.
A key focus will be on expanding GM's offerings of utility vehicles and luxury cars, including the Cadillac lineup.
GM will launch 11 new utility vehicles in China over the next five years, Tsien said. Two will arrive this year, the Chevrolet Trax compact crossover and a mid-sized vehicle from Buick.
SUV sales alone will account for 7 million units in China by 2020, more than triple the segment's current size, GM predicts.
"Last year, more than 60 percent of people who bought their first car chose an SUV," Ammann said. "Think about that."
Luxury car sales are also expected to soar, accounting for 10 percent of the China market in 2020. China luxury sales will surpass U.S. demand in the next couple of years, Ammann said.
GM will respond by adding one new Cadillac model a year through 2016. Cadillac aims to sell 100,000 units in China by 2015, double its 2013 results, Tsien said.
Total domestic passenger vehicle capacity stands at 17.6 million this year and should hit 21.7 million by 2018, predicts Yale Zhang, managing director of Automotive Foresight in Shanghai. GM's plan to reach 5 million by the end of 2015 will likely give it the largest vehicle manufacturing footprint in China, he said.
Zhang said carmakers must keep expanding or risk falling behind because even slower expansion still delivers such huge volumes.
"Capacity now is a competitive edge," he said. "If you have capacity, then you have more volume and more market share.
"We are investing wisely and accelerating our vehicle development and manufacturing capacity so that we may keep pace with the market demand," GM China President Matt Tsien said.
GM's aggressive plans come as the growth in China auto sales cools to single digit rates after years of double-digit expansion. The market for light vehicles grew 15 percent in 2013, according to IHS Automotive. But growth will inch along below 10 percent in coming years, slowing to 2.5 percent by 2020, IHS predicts.
GM expects the China market to grow 8 percent to 24 million vehicles this year. GM projects the overall China market will reach 33 million to 35 million new units annually by 2020, an increase from roughly 22.2 million vehicles in 2013.
That level of volume will be double the size of projected total U.S. demand in 2020, GM President Dan Ammann said.
To keep up, GM will invest $12 billion in China between 2014 and 2017. The goal is to boost capacity 65 percent by 2020.
China's No. 2 manufacturer by sales already has four new plants under construction that will open by the end of 2015, boosting capacity to 5 million units from around 3 million units today.
Ammann called the 2020 capacity expansion a soft target, and declined to give a long-range capacity figure or say how many additional factories GM would need to achieve such output.
GM is prepared to adjust plans for additional China capacity according to market trends, he said.
A 65 percent expansion over 5 million units would put GM's capacity in the neighborhood of 8 million vehicles.
The product expansion entails the introduction of 60 new or refreshed vehicles in 2014 through 2018, Tsien said.
A key focus will be on expanding GM's offerings of utility vehicles and luxury cars, including the Cadillac lineup.
GM will launch 11 new utility vehicles in China over the next five years, Tsien said. Two will arrive this year, the Chevrolet Trax compact crossover and a mid-sized vehicle from Buick.
SUV sales alone will account for 7 million units in China by 2020, more than triple the segment's current size, GM predicts.
"Last year, more than 60 percent of people who bought their first car chose an SUV," Ammann said. "Think about that."
Luxury car sales are also expected to soar, accounting for 10 percent of the China market in 2020. China luxury sales will surpass U.S. demand in the next couple of years, Ammann said.
GM will respond by adding one new Cadillac model a year through 2016. Cadillac aims to sell 100,000 units in China by 2015, double its 2013 results, Tsien said.
Total domestic passenger vehicle capacity stands at 17.6 million this year and should hit 21.7 million by 2018, predicts Yale Zhang, managing director of Automotive Foresight in Shanghai. GM's plan to reach 5 million by the end of 2015 will likely give it the largest vehicle manufacturing footprint in China, he said.
Zhang said carmakers must keep expanding or risk falling behind because even slower expansion still delivers such huge volumes.
"Capacity now is a competitive edge," he said. "If you have capacity, then you have more volume and more market share.
