GM to make light trucks in China
By Patti Waldmeir
Published: August 30 2009 18:25 | Last updated: August 30 2009 18:25
General Motors has formed a 50-50 joint venture with FAW Group to make light trucks in China for the first time – in a further sign of the US carmaker’s increased focus on the Chinese market in the face of weak US sales.
Total investment in the joint venture with the Chinese vehicle maker would be Rmb2bn ($293m), GM said on Sunday, under a deal that the two companies had been negotiating for several years.
The partnership with FAW, called FAW-GM Light Duty Commercial Vehicle Co, will be GM’s third joint venture with a local vehicle maker but the first to produce trucks. GM’s other Chinese joint ventures produce passenger cars and mini commercial vehicles. GM passenger car sales in China rose 52 per cent year-on-year in July, traditionally a weak month, according to figures from JD Power, the car consultancy.
Total Chinese light vehicle sales in July were up a remarkable 60 per cent year-on-year at 1.03m vehicles, the JD Power figures showed. Chinese light vehicle sales have continued to surprise vehicle market analysts since January.
Kevin Wale, head of GM in China, said GM would increase its forecast for the company’s 2009 sales in China due to surprisingly strong demand. Earlier this year, China overtook the US to become the world’s largest vehicle market. Nick Reilly, president of GM international operations, said that the new truck venture, which would have a capacity of 200,000 units by next year, “sends an important signal of GM’s ongoing commitment to China”. Mr Wale said GM wants to expand into the commercial vehicle market, because China represents more than 50 per cent of global commercial vehicle sales.
The venture aimed to sell between 80,000 and 90,000 vehicles this year and 100,000 next year, Mr Wale said. It would initially focus on local sales but would explore opportunities for exports over time, he added.
JD Power’s latest report on the Chinese light vehicle market predicts that passenger vehicle sales will rise 25 per cent this year and light commercial vehicles sales will be up 39 per cent – largely because of a government stimulus programme aimed at boosting sales of small cars and vehicles in rural areas.
Sales of mini commercial vehicles from GM’s joint venture with SAIC and Liuzhou Wuling Motors rose 95 per cent year-on-year in July, the report said.