GM opens China test track in effort to remain market leader

DETROIT Sat Sep 22, 2012 10:53am EDT

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DETROIT (Reuters) - General Motors Co (GM.N) opened a new, large vehicle test track west of Shanghai on Saturday as part of its push to retain its leading market share in the world's largest auto market.

The No. 1 U.S. automaker and its joint venture partners, including SAIC Motor (600104.SS), invested about $252.5 million to build what GM China President Kevin Wale called the country's largest proving ground.

"When we look forward, our volumes are going to increase significantly and to win in the market place you have to introduce more products and introduce them quicker and better than the competition," he told Reuters by telephone from the track opening on Saturday in China.

"So it's a necessary spend if you're going to be as big a player as we are in China."

GM invests $1 billion annually in China.

The 1,400-acre (560-hectare) facility was opened in Guangde County, Anhui province, and will employ about 100 people as part of GM's drive to develop vehicles faster in a market where it had a leading 14 percent share last year.

GM previously used tracks owned by other companies or the government to test vehicles, or shipped cars to other countries, including South Korea or the United States, Wale said.

"You can use proving grounds elsewhere in the world, but you have to ship cars, which is a waste of time and a tremendous waste of money," he said. "If you can have a world-class proving ground in improving the cars, you're going to build better cars and you're going to save a lot of time in development."

GM is making the investment despite a slowing in the Chinese auto market because it is focused on the long-term growth prospects, Wale said. He still expected overall industry sales this year to finish between 19.5 million and 20 million vehicles up from 18.5 million last year.

GM Chief Executive Dan Akerson previously said he expected annual Chinese auto industry sales to hit 30 million vehicles by the end of the decade.

On Friday, GM topped 2 million sales for 2012 in China for the third straight year. It was the earliest it has ever surpassed that total.

Through September, GM sales were up 11.2 percent, compared with a 4.1 percent increase in the same period for the entire Chinese industry. GM sold 2.5 million vehicles in China last year, up from 560,000 in 2005, when Wale took over the region.

GM, whose joint venture in China began building vehicles in 1999, sells under the Buick, Chevrolet, Cadillac, Opel, Wuling, Baojun and Jiefing brands. Wale said GM had to continue to roll out new products as the market grows, including adding products in the SUV and luxury car segments.

Wale said the new track, which is smaller than GM's more than 4,000-acre proving ground in Milford, Michigan, outside of Detroit, will allow the automaker to run 67 different driving tests. The Chinese track is calibrated to Milford so information can be shared and vehicles can be developed faster.

"Speed is everything in China," Wale said. "The market moves quickly and you've got to adapt quickly."

(This story corrects figure in paragraph 5 provided by the company: $1 billion instead of $1.5 billion)

(Editing by Ron Popeski)

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