General Motors Co. and its partners in China formally opened Sunday a new plant in the country for its low-cost no-frill Baojun brand. GM’s new plant in Liuzhou, China will be the second factory to produce vehicles by Baojun, a unit that has starting price of as low as CHY40,000 ($6,400). The opening of the new plant is expected to further turn up the heat of the rivalry between foreign-led joint ventures that manufactures low-cost units for China’s middle class.
It is also expected to increase further the pressure on local entry-level carmakers like Chery and Geely. According to U.S. consulting firm Alix Partners, it is estimated that by 2013, around 65.6 million households in China will have annual incomes of CHY60,000 or more – which is enough for a family to acquire a low-cost car.
Nissan Motor Co. earlier launched the second of five models of its low-cost Venucia marque that the carmaker and its local partner plan to roll out in China by 2015. Nissan targets to sell 300,000 Venucia cars annually by 2015. GM's new plant in Liuzhou, which operates as part of the SAIC GM Wuling Automobile Co. joint venture, will eventually have an annual production capacity of 400,000 cars.
According to GM officials, the Liuzhou was likely to build vehicles not just for Baojun but also for the venture’s other low-cost brand Wuling. GM invested around CHY8 billion for the first phase of construction of the Liuzhou plant, where the Baojun 630 rolled off the assembly line on Sunday. So far, it builds two products for Baojun: the 630 compact sedan that carries a starting price of CHY62,800, and the Le Chi mini car.