Business / Auto China

GM to battle VW in China with $12b investment

(Agencies) Updated: 2014-04-21 08:07

The grille of the Cadillac Elmiraj concept car as the vehicle is displayed during the press preview day of the North American International Auto Show in Detroit, Jan 14, 2014. [Photo/Agencies]

BEIJING - US car giant General Motors Corp (GM) plans to invest $12 billion in China from 2014 to 2017 and build more plants next year as it competes with aggressive rivals in the world's largest auto market.

GM expects its China sales to expand 8-10 percent this year, in line with the overall growth of the Chinese market, where foreign firms, such as Volkswagen AG, and domestic players like SAIC Motor Corp vie for more market share.

"We are investing wisely and accelerating our vehicle development and manufacturing to keep pace with market demand. In total we are investing $12 billion between 2014 and 2017," Matt Tsien, president of GM China, said at the Auto China show in Beijing.

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GM plans to build five more plants in China next year, as part of its efforts to ramp up manufacturing capacity there by 65 percent by 2020, executives said on Sunday.

Rival Volkswagen's early entry into China focused on rapidly-developing eastern provinces - now it plans to push into the west.

VW's luxury division Audi which will target smaller megacities in central and western provinces to raise the number of dealerships by about half to 500 in the next three years, chief executive Rupert Stadler told Reuters.

"That's where new business is emerging, where things get rolling," Stadler said at the Beijing show. "We don't need more dealers in Beijing and Shanghai."

Western cities

China's auto market is set to expand 8-10 percent this year, slightly slowing from 2013 when it sold 21.98 million vehicles, up 13.9 percent from a year earlier.

Vehicle density in China's smaller cities offer lucrative growth prospects.

The average number of cars per 1,000 inhabitants in Ya'an, a city of about 2 million population in Sichuan province is 18, compared with 123 in first-tier coastal cities Shanghai and Guangzhou, according to VW's website.