GM, China JV Partners Break Ground on Two New Plants

General Motors and its Chinese joint-venture partners break ground on two new production facilities and an expansion of a technical center this week.

GM Chairman and CEO Dan Akerson participated in the sod-turning for the auto maker’s JV with Shanghai Automotive Industry for a new Cadillac plant with annual production capacity of 160,000 units.

The groundbreaking in Shanghai also marked the start of construction of a new facility in that city for the Pan Asia Technical Automotive Center, another JV between GM and Shanghai Automotive. The combined investment in both facilities is RMB8 billion ($1.3 billion).

The JV between Shanghai Automotive, GM and auto maker Wuling is building a small-commercial-vehicles plant in Chongquing in the Liangjiang district of Midwestern China.

The first phase of the new factory involves an investment of RMB6.6 billion ($1.1 billion). When fully operational in 2016 it will have capacity to produce 400,000 vehicles annually. Some production is expected to begin sometime in 2014.

Akerson says GM plans to introduce a new model in China over each of the next six years, while tripling Cadillac’s current sales rate in the country to 100,000 units annually by 2015.

The SAIC-GM-Wuling JV already is well-established in China. It was the country’s top seller of small CVs last year with 1.4 million deliveries, representing nearly half of the market-leading 2.84 million vehicles sold by all of GM’s Chinese JVs.

Through May, those JVs sold 1.33 million vehicles, a 10.6% year-on-year increase. SAIC-GM-Wuling delivered 682,354 units, up 5.8%.

The JV says the new Chongquing facility will increase its production capacity to more than 2 million units and add an estimated RMB13 billion ($2.1 billion) in sales revenue. The added capacity will help meet increasing demand, especially in Central and Western China, analysts say.

But SAIC-GM-Wuling also is growing as an export arm of GM’s Chinese operations. The JV has exported vehicles to markets in the Middle East, North Africa and South America as complete-knocked-down kits for local assembly since 2009, but does not provide sales numbers.

Earlier this month General Motors India began producing the JV’s Wuling Hongguang small van from CKD kits under the Chevrolet Enjoy badge. The JV already produces a version of the Chevrolet Sail small car in India, using the design and technology developed by PATAC.

The newest PATAC facility will complement the technical center’s Jinqiao design and engineering center and Wanggang testing and pilot production center, both located in Shanghai, and the Guangde proving ground.

Groundbreaking of the new GM-SAIC-Wuling CV factory occurred as 16 supplier companies signed agreements with the Liangjiang District government to build production facilities near the Chongquing plant.

The Shanghai GM partnership’s new Cadillac plant includes body, paint and general assembly departments. Its automation systems will be among the most advanced in the world and the plant will include “many new processes in its lean, green operations,” the JV says in a statement.

“General Motors made a long-term commitment to China when we established our Shanghai GM and PATAC joint ventures more than 15 years ago,” Akerson says. “Today, we are renewing that commitment while celebrating our outstanding partnerships with SAIC.

“We are also sending a strong message about the important role of Shanghai and China in GM’s global operations.”

Adds GM Shainghai President Ye Yongming: “Shanghai GM’s new plant and PATAC’s new facility will enhance our ability to engineer and manufacture vehicles for our customers across China. They will support the full implementation of our luxury-car strategy while allowing us to address competitive challenges well into the future.”

Bob Socia, who heads GM China, says the projected increase in luxury-car sales in China this year have been scaled back to about 4% from the 8% growth that had been anticipated earlier. GM China expects overall industry sales to increase 7% to 8%.