GM's prices outpace rivals in China

General Motors Corp, which grabbed a record first-half share of China's vehicle market, began selling its sixth 2005 model for the country yesterday, pricing the Chevrolet Aveo at less than Volkswagen AG's Polo and Honda Motor Co's Fit.

Chevrolet Aveo, a hatchback car made in Shanghai with a 1.4-liter capacity engine, is priced from 84,900 yuan (US$10,470), General Motors said. That's less than the 1.4-liter Polo, with a starting price of 103,800 yuan and the 1.3-liter Honda Fit, at 94,800 yuan, according to prices quoted by Xinhua news agency.

Detroit-based General Motors, with three manufacturing ventures in China, rolled out more vehicle designs in the country in the first six months than any other carmaker, using its global range of models to attract customers. The maker of Cadillac luxury cars and Buick sedans is counting on the Aveo to compete for first-time buyers with Volks-wagen and Honda.

"We are looking at people who are taking a taxi or bus now" and who are "looking for their first car," Dale Sullivan, the Chevrolet brand director at Shanghai General Motors, said on Sunday.

"The small-to-medium vehicle segment is probably the most competitive in China," Sullivan said.

The Aveo, based on the GM Daewoo Auto & Technology Co's Kalos compact cars, is GM's fourth Chevrolet model in China, after the Spark minicar, the Epica sedan and the Sail compact cars, re-badged from Buick. GM is aiming to sell more than 10,000 Chevolets a month in China, Sullivan said.

GM releasing more models designed for first-time buyers in China to close its sales gap with Volkswagen. Small cars, with engines of less than 2 liters capacity and priced at about 150,000 yuan, are expected to account for about half of China's passenger car sales next year, according to Automotive Resources Asia Ltd, compared with 40 percent now.

GM 41,739 Spark, Epica and Sail models in China in the first half, accounting for about 30 percent of the company's total sales during the period, Sullivan said.

The carmaker will make a sedan version of the Aveo next year in China, increasing its dealerships to 150 by the end of this year, GM said.

Total sales in the country rose 10.6 percent from a year earlier to 1.84 million units in the first half, while vehicle sales rose 9.4 percent to 2.79 million units during the period.

Automakers China may release about 35 new passenger-car models in China in the second half after adding about 40 new models in the first half.

About units of vehicles were owned by 100 households in China in 2003 compared with 0.34 in 1999, according to official statistics. Per capita disposable incomes in urban areas -- home to two-fifths of China's 1.3 billion people -- rose 9.5 percent in real terms to 5,374 yuan in the first half, the statistics bureau said. Per capita cash incomes in rural areas increased 12.5 percent to 1,586 yuan.

China an estimated 25 percent to GM's global profit for last year. GM, which invested almost US$2 billion in China since 1997, last year announced US$3 billion of additional funds to double production in the country by 2007 while reducing output in the US and in Europe.

General Motors sold 19 percent more vehicles in China in the first half from a year earlier to 308,722 units, giving the company a record 10.9 percent of the market. It sold 135,381 units of passenger cars during the period after releasing five new models including Epica and Cadillac luxury sedans.

Volkswagen, which remained China's biggest carmaker in the first half, sold 265,000 units of passenger cars with 18 percent of the nation's retail market.