THE TIMES OF INDIA

FRIDAY, SEPTEMBER 5, 2003

GM's China auto venture revs up production

REUTERS

SHANGHAI: General Motors Corp's Shanghai partner says output at their joint
venture will jump over 70 per cent this year, as the world's largest auto
maker moves to close the gap with Volkswagen AG in the world's
fastest-growing car market.

"Market demand for cars is strong," said an executive at Shanghai GM, a
50-50 venture between the two firms.

"Our car output will hit 180,000 to 190,000 units, and that will be a rise
of over 70 per cent compared to last year," he told Reuters.

Sales are expected to double to 38 billion yuan ($4.6 billion) in 2003, the
Economic Information Daily quoted Chen Hong, the chairman of the joint
venture, as saying.

Even with those bullish expectations, GM has a long way to go before
catching Volkswagen's joint venture, which has between 30 and 40 per cent of
the China car market versus eight to nine per cent for the GM partnership.

A source close to the company, based in China's commercial hub, confirmed
Chen's comments but declined to say more.

Analysts and government officials worry that the booming capacity at Chinese
automakers might erode margins and foment a debilitating industry-wide glut.

GM said last month it had tacked on an additional shift at its five year-old
facility to ramp up output by half to 18,000 units monthly, and awaited
approval for a new factory in Shanghai that executives said was slated to
start up in 2005.

Analysts view China as one of the world's most promising markets, buoyed by
a rising affluent class created by galloping economic growth.

They foresee car sales smashing the two million-unit mark this year after
breaking the one-million barrier in 2002.

Analysts also say GM is on track to grab market share from longtime industry
leader Volkswagen, which has seen market share dip from about half in the
mid-1990s to about 30-40 per cent now.

GM runs several plants around the country with local partners. Last year,
those ventures collectively cranked out 264,101 vehicles, a surge of 325 per
cent over 2001.

The US company will introduce the Excelle sedan this month in what GM calls
its first foray into the lower-medium sedan market. It aims to roll out
35,000 of these cars this year.

($1=8.276 Yuan)

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