GM boosts exports of China-built cars to supply emerging markets

BEIJING, June 3 Mon Jun 3, 2013 4:27am EDT

BEIJING, June 3 (Reuters) - General Motors Co, the biggest foreign automaker be sales in China, aims to boost its exports from the country by nearly 70 percent this year because of strong demand for its Chinese-developed low-cost cars, a local executive said.

The U.S. automaker plans to export as many as 130,000 China-made vehicles this year, up from 77,000 vehicles in 2012, driven by demand for its Chevrolet Sail in other emerging markets.

"While GM's primary philosophy is to manufacture where it sells, we find that product exports are necessary to meet global market demands when GM does not have local manufacturing capabilities for a particular vehicle," Bob Socia, the head of GM in China, told Reuters in an email.

The Sail, which was co-developed with partner SAIC Motor Corp, became an instant hit when it was launched in January 2010. It is the first foreign brand in China with a price tag below 60,000 yuan ($9,800).

The Sail, which accounted for 80 percent of GM's exports from China last year, is also helping the firm compete with Japanese, South Korean and other brands in South America and other emerging markets, said Socia, who is also chief country operations officer for GM's China, India and ASEAN operations.

To meet increasing demand from abroad, GM is now assembling the Sail in Colombia, Ecuador and India using components supplied by its Shanghai car venture with SAIC.

In the first four months of the year, GM shipped 33,623 vehicles overseas, surpassing Geely Automobile Holdings Co Ltd to become China's second-largest auto exporter after Chery, which shipped 46,234 during the period, according to Namrita Chow, a senior analyst at IHS Automotive.

With a few exceptions, such as Honda Motor Co Ltd, which makes the Jazz compact car exclusively for the European markets at a small facility in southeastern China, exports of China-made cars by foreign automakers have been limited.

Volkswagen AG, GM's closest rival in the country, has no plans to boost exports from China in the near future, a local spokesman said.

What sets GM apart in its ability to tap emerging markets with its China-built cars is its heavy investment in research and development in China, analysts say.

"GM has invested heavily in R&D in China over the past years," said John Zeng, North Asia director of consultancy LMC Automotive, noting that the research and engineering venture GM has with SAIC since 1997 is also helping develop designs for Buick.

Foreign automakers that have exported small volumes from China include PSA Peugeot Citroen's car venture Dongfeng Automobile Group Co (DPCA) and BMW.

DPCA and BMW shipped 1,152 and 102 China-build cars during the first four months of 2013, respectively. Honda shipped 7,972 cars overseas during the period.

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