GM Planning to Buy Chinese Factories to Boost Capacity

General MotorsGMUnited States of America, 1998 > present8 models
240 photos
and its partner SAICShanghaiChina, 1958 > 19792 models
plan to take advantage of the consolidation in the Chinese auto market to increase sales. The Chinese auto market is still growing, but the Chinese government wants to consolidate its nation's automakers. It is attempting to go from many small automakers to fewer, larger ones, and GM and SAIC intend to buy some of these smaller car companies. The goal is to increase sales to five million cars by 2015. 

GM and SAIC will open two factories in China in 2014 that will boost capacity to four million cars. The extra million cars will come from buying under capacity Chinese auto factories.  

China started its new policy to consolidate its automakers last year when it said that it would not allow any more foreign auto factories in the country. Imported cars face 25% tariffs in China. To be successful in the market foreign automakers have to build their cars there. The new rule has foreign automakers scrambling to buy small Chinese auto factories to boost their production capacity. 

There is not a paucity of underused, cheap auto factories in China. According to analysts LMC Automotive, China has a vehicle production capacity of about 10 million cars more than it actually makes. There are 71 registered automakers in China, and ten of those did not even produce any cars last year. 

Source: Automotive News