GM Is Routing $12B to Chinese Operations to Fuel Capacity Surge
After suffering a blow that landed General Motors (NYSE:GM) in the backseat of China’s automotive market behind Volkswagen, the Detroit-based company is preparing a $12 billion assault of investments from this year through 2017 to bring its capacity in the region up by 65 percent by 2020, Reuters is reporting. The news comes as GM, while still seeing substantial growth, is seeing those figures start to slow.
This year, the company is expecting Chinese sales to grow by 8-10 percent. “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, Reuters quoted.
The company has plans to build five more production plants in China next year. But Volkswagen, which has an early-mover advantage in the country, is close behind, and is planning a growth strategy of its own. VW’s Audi luxury arm, which will target smaller megacities in central and western provinces in China, will 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.”
Adding to GM’s challenges, Ford (NYSE:F) will be releasing its Lincoln brand in the country this summer, offering another American luxury option for consumers who have been ravenously gobbling up Buicks and Cadillacs.