HURSDAY, FEBRUARY 26, 2004
GM in JV for fourth China plant
REUTERS
SHANGHAI: General Motors (GM), the world's largest auto maker, and Shanghai Automotive Industry Corp inked a deal on Thursday for a fourth jointly-owned car factory in China as GM tries to catch up with Volkswagen AG.
Their 50-50 venture, Shanghai GM, will buy a 50% stake held by four Chinese firms in the troubled Jinbei GM plant in the northeastern city of Shenyang , a GM executive said on Thursday.
It is the kind of expansion GM must maintain as it battles to grab market share from domestic leader Volkswagen, analysts said. GM controlled just under 9% of the market in 2003, against some 33% for Volkswagen. "It's not just got to keep an eye on Volkswagen. The market is incredibly competitive now," said Liu Fei, an analyst at Automotive Resources Asia, an industry consultant. "It's not a surprise GM felt it had to do this."
Jinbei GM, which has capacity to crank out 30,000 vehicles a year, sold just under 3,300 in 2003, hampered by a poor distribution network and reliance on a single product - the Chevrolet Blazer sport utility vehicle.
"Jinbei GM has always performed under par, probably because it had weak Chinese partners," said China Southern Securities analyst Xu Xiang. "Shanghai Auto is an old hand in the domestic market, and their entry into this venture will be of great help," Xu said.
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