News From the Auto Industry

The plant, with an annual production capacity of 100,000 units, will initially produce the compact Buick Sail model, which sold more than 50,000 units in the first 11 months of 2002. The plant, which will start regular production beginning in May, will free up capacity in Shanghai GM’s flagship facility for existing and future products, GM said in a statement.

Shanghai GM’s share of China’s passenger car market has grown to about 8.6 percent in 2002 from 3 percent in 1999, placing it behind the two joint ventures of Germany’s Volkswagen AG. General Motors China will own 25 percent of the plant, and Shanghai Automotive Industry Corp. Group will own another 25 percent.

The Yantai plant is GM’s fourth manufacturing facility in China, the world’s fourth largest auto market behind the U.S., Japan and Germany.

Shanghai General Motors, the 50-50 joint venture between GM and SAIC, will own 50 percent and oversee the plant’s management. “[The purchase of YBC] will enable Shanghai GM to efficiently expand its annual manufacturing capacity from 100,000 to 200,000 units, enhancing our leadership position in China’s car market,” Chen Hong, president of Shanghai GM, said in a statement.

GM’s flagship $1.5 billion manufacturing plant in Shanghai, where it makes Buick sedans and Sail compact sedans, is already operating at nearly full capacity. GM recently invested more than $30 million for a 34 percent stake in SAIC-GM-Wuling Automotive Stock Ltd., which makes minivans.

China’s auto market is likely to overtake Germany as the world’s third largest by 2007 or 2008, and overtake Japan by 2010, Murtaugh said recently.