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GM Launches Venture To Build Trucks In China
General Motors Co. announced a new joint venture in China to make light-duty trucks as part of an effort to penetrate further into China's vibrant auto market, a key strategic focus for the recently restructured car maker.
GM announced Sunday the 50-50 joint venture with FAW Group Corp., a major Chinese state-owned auto maker. The two companies are making a combined investment of 2 billion yuan ($293 million) for the new company, and will significantly expand FAW's existing light commercial truck business, GM said.
The venture, based in the northeastern Chinese city of Changchun in Jilin province, has two existing assembly plants and is moving to add another, capable of producing 100,000 vehicles a year, by the end of 2010, said GM China President Kevin Wale.
The new plant would push the joint venture's annual capacity to 200,000 trucks -- more than double what it expects to sell this year.
The new venture gives GM's expanding China business a 'very important' foothold in a segment that is 'growing rapidly,' Mr. Wale said in a conference call with reporters.
China's light commercial truck market represents more than 50% of global light commercial vehicle sales and is 'clearly a key focus for future growth for GM,' he said.
Light commercial truck and van producers in China shipped a total of 769,000 vehicles during the first seven months of the year, GM said.
The joint venture comes as part of GM's strategic move to make China a pillar of its global business, establishing a presence in key segments of the country's expanding auto industry and positioning its operations to be an export hub to take advantage of relatively lower costs in China.
'This is an important complement to the rest of our [business] portfolio,' Mr. Wale said. GM's business in China already includes production and sales of passenger cars and micro-minivans with different Chinese partners.
Helped by government stimulus measures this year, including sales-tax cuts on cars, GM's China sales in the January-July period soared 42.8% from the same period last year to 959,035 units.
China is one of a few major markets world-wide that have managed to grow despite the global economic downturn since last year.
The commercial vehicle venture follows a recent move by GM to expand exports of low-cost micro-minivans made in China to additional markets in South America, the Middle East and North Africa.
Mr. Wale said the new venture with FAW also would look at the possibility of exporting light commercial trucks 'over time.'
The venture's two existing plants, which come from FAW, are in northern Heilongjiang province and in the southwestern province of Yunnan and have a combined annual capacity of about 100,000 vehicles.
The venture expects to sell 80,000 to 90,000 vehicles this year, including those already sold by FAW, and is targeting sales of more than 100,000 units next year, Mr. Wale said.
