* $1.06 bln first phase of plant scheduled to start in 2015
* Annual production capacity to be 400,000 vehicles
By Ben Klayman
Nov 28 General Motors Co and its Chinese
joint-venture partners said on Wednesday they plan to build a $1
billion auto assembly plant in the city of Chongqing as the GM
group bids to remain the leader in the world's largest auto
GM, SAIC Motor Corp and Wuling Motors Holdings
Ltd said they will begin construction of the plant
early next year, pending government approvals. The 6.6 billion
Chinese yuan ($1.06 billion) first phase is scheduled to start
The plant in southwestern China will have annual production
capacity of 400,000 vehicles, but the partners did not disclose
what vehicles will be built there. It also will have the
capacity to build 400,000 engines annually, a GM spokesman said.
"It's a numbers game," J.D. Power and Associates senior vice
president John Humphrey said. "They're doing a phenomenal job,
the market continues to grow, vehicle penetration is still so
low, GDP per capita continues to increase and the west of China
is where a lot of the action is going to come going forward.
"Having production further in the western part to get a
foothold there and penetrate the tier two and three and four
cities makes perfect sense for them," he added.
The new plant is part of SAIC-GM-Wuling's push to reach a
production target of 2 million vehicles per year by the end of
2015. GM invests $1 billion annually in China.
Chongqing, one of China's largest cities, is home to a plant
operated by Ford Motor Co and its Chinese partner Changan
GM, whose Chinese joint venture began building vehicles in
1999, had a leading 14 percent of China's market of 18.5 million
vehicles last year - just ahead of Volkswagen AG,
which also counts SAIC as a partner.
Earlier this month, GM and its Chinese partners opened a
plant in the southern city of Liuzhou for its low-cost Baojun
brand. That plant will also eventually have an annual production
capacity of 400,000 vehicles.
GM has said it expects vehicle sales in China to hit as many
as 20 million this year, and Chief Executive Dan Akerson
previously predicted annual industry sales in China will hit 30
million vehicles by the end of the decade.
In addition to the Baojun brand, GM's portfolio in China
includes Buick, Chevrolet, Cadillac, Opel, Wuling and Jiefang.
In September, GM opened a large vehicle test track west of
Shanghai. GM and its partners invested $252 million to build
what officials called the country's largest proving ground.
In addition to Liuzhou, the joint venture currently operates
a plant in Qingdao. GM and SAIC, through a different joint
venture, also have a plant in Shanghai, and several more in