GM gets new capacity to tap buoyant China SUV segment

PUBLISHED : Monday, 24 October, 2016, 9:09pm
UPDATED : Monday, 24 October, 2016, 10:54pm

General Motors will launch its second production line in Wuhan, China, during the first half of next year, adding a much-needed capacity to meet the growing demands for sport utility vehicles (SUVs) in the world’s largest vehicle market.

The 7.5 billion yuan factory in the central Chinese city that is invested by SAIC General Motors (SGM), a joint venture between SAIC and GM, is expected to make more than 300,000 passenger vehicles, mainly SUVs, a year, doubling the total capacity at the Wuhan line to 600,000, according to two sources whose companies are involved in supplying parts to SGM.

Added capacity is in high demand as big carmakers including GM see their production of SUVs reach a saturation point
Yale Zhang, Automotive Foresight

GM China confirmed the details for the launch of the new plant on Monday.

It will produce a new generation of GM Chevrolet Equinox SUVs.

“Added capacity is in high demand as big carmakers including GM see their production of SUVs reach a saturation point while demand continues to rise in China,” said Yale Zhang, the managing director of industry researcher Automotive Foresight. “It is the right time to put in operation new production lines.”

The SUV market has been the fastest-growing segment for mainland-based carmakers since 2012 as young drivers in the country increasingly focus on driving experience amid their rising purchasing power.

In the first nine months of this year, more than six million SUVs were sold on the mainland, a jump of 45.9 per cent from the same period in 2015, according to the China Association of Automobile Manufacturers.

The growth of SUV sales is more than triple the pace of 14.8 per cent growth in sales of all passenger vehicles.

Sales of SUVs on the mainland have recorded annualised growth of at least 40 per cent in the past two years and the momentum would continue in the next two to three years, Zhang said.

GM began installing a second production facility in Wuhan at the beginning of this year.

The US carmaker will continue to compete against global rivals such as Volkswagen to vie for a bigger share in the Chinese market.

VW also plans to add capacity in Foshan in Guangdong, Qingdao of Shandong and Tianjin in the north.

SGM’s first factory in Wuhan reported sales of nearly 23 billion yuan in the first nine months of this year, Xinhua said.

Last week, Alan Batey, president of GM North America and head of Global Chevrolet, said that more than 20 new or refreshed products would be introduced to China by the end of 2020, pledging to roll out cars with the latest technologies aimed at improving safety, performance and fuel efficiency for customers in its second-largest market.

SGM is among the top three carmakers on the mainland in competition with Volkswagen’s two joint ventures in Shanghai and Changchun, capital of northeastern Jilin province.