Business / Auto China

GM to battle VW in China with $12b investment

(Agencies) Updated: 2014-04-21 08:07

Parent VW was one of the first global automakers to launch production in China during the 1980s, is evolving its operations in the country by pushing west.

"A large sales potential for passenger cars will develop there fairly quickly," Jochem Heizmann, head of VW's China operations told reporters. "That's one factor driving growth besides state-induced urbanization."

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VW, which last year opened factories in Chengdu and Urumqi, is counting on double-digit market growth to increase group deliveries to over 3.5 million this year, a record, from 3.27 million in 2013, CEO Martin Winterkorn said.

China's auto market rose 13.9 percent to 21.98 million vehicles last year, compared with a 7.6 percent gain in the United States to 15.6 million.

Wolfsburg-based VW, having eclipsed General Motors last year as the top-selling foreign brand in China, aims to consolidate its lead with aggressive spending.

Its two joint venture partners, First Automotive Works and Shanghai Volkswagen, are planning to spend 18.2 billion euros through 2018, the year VW has pledged to take the global car-sales crown, on models, technologies and plants.

GM's five new Chinese plants will be in Wuhan, Chongqing, Jinqiao and Shenyang. Four of those will be vehicle assembly plants, while the fifth one will be an engine plant in Shenyang.

The Jinqiao plant will make its flagship Cadillac sedans. GM aims to sell 100,000 by 2015 in China, rising from roughly 50,000 last year, executives said.

"Cadillac's growth is on the launch of new products. We launched the XTS, which allowed us to get to the 50,000 levels. This year, we will launch another significant product and next year, we will launch another," GM's Tsien said.