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Mon, Oct 20, 2003 - Page 12 News List

GM says expanding capacity in China is 'a matter of time'

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General Motors Corp, which has invested US$1.5 billion in four factories in China, said it's only a matter of time before it has to increase capacity in the world's fastest growing vehicle market.

General Motors is forecasting the Chinese automobile market will expand to 4.4 million units this year, a 29 percent rise from last year. Shanghai General Motors Co., founded in 1997, makes Buick Sail, Regal and Excelle passenger cars and the Buick GL8 van.

Analysts such as Mei Luwu at Penghua Fund Management in Shenzhen say the factory can't produce enough to meet demand.

"Well before the end of this decade China will surpass Japan and become the second-largest automotive market in the world," Frederick Henderson, General Motors' president for Asia-Pacific, said in an interview in Bangkok. The company's flagship Shanghai factory recently started a third shift and new capacity in China is "not a question of if, simply a question of when," he said.

General Motors and its rivals Ford Motor Co, Volkswagen AG and Toyota Motor Corp, are expanding production in China to meet rising demand from increasingly wealthy Chinese urban residents at a time markets elsewhere are slumping. Car sales may drop 4.3 percent in Western Europe and fall 3 percent in North America, according to London-based World Markets Research Center.

Shanghai GM sold 133,000 units in the first nine months of the year, 62 percent more than a year earlier. General Motors sold 267,395 vehicles in the first nine months of this year among all its China ventures, nearly 38 percent more than last year.

Henderson declined to say if General Motors would add new capacity in China by setting up new joint ventures, or by adding new production lines in existing plants.

Elsewhere in Asia, General Motors doesn't see any immediate need to build new factories, except in India, said Henderson, who is attending a meeting of business leaders from the 21-country APEC forum in the Thai capital.

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