A provincial government statement from China revealed that General Motors is about to get approval to construct a 7 billion yuan ($1.1 billion) factory in China. On its Web site, the Hubei Environmental Protection Bureau said that this factory, which is run by GM's passenger-car venture with SAIC Motor Corp., will have a production capacity of 300,000 vehicles each year. This plant will be built in the central city of Wuhan. Shanghai GM is contented with its present capacity arrangements and hasn’t made a decision yet on constructing a new factory in Wuhan, according to spokesman Jerry Ma.
This statement was released just two months after China's government opted to end a seven-year policy of giving encouragement to foreign companies to invest in the nation's carmaking industry. This facility would boost GM's passenger-vehicle capacity, which research firm IHS Automotive estimated to be at 2 million units last year, by around 15%. This lessens the strain on current plants that are rolling out cars in excess of their normal output.
Cao He, an analyst with China Minzu Securities Co. in Beijing, said that GM is operating on a “tight capacity” and that this expansion will raise the competitiveness of this company. GM will be nearer to its customers and the logistic costs will be reduced while it gains a foothold in central China. GM produces vehicles in the eastern province of Shandong, the southern province of Guangxi, the northeastern city of Shenyang and the eastern city of Shanghai. This move would aid in widening GM's lead as the largest foreign automaker in the biggest vehicle market in the world. Its deliveries to Chinese dealers increased by 8.3% to 2.55 million vehicles in 2011, doing better than the 5.2% growth in China’s passenger-car industry. [source: Autonews]