GM venture in China plans $1 billion auto plant

HONG KONG General Motors Co. (GM) and its joint venture partners in China say they will spend 6.6 billion yuan ($1 billion) to build a third car plant to keep up with demand for vehicles in the world's biggest auto market.

The SAIC-GM-Wuling venture said the first phase of the factory will open in 2015.

The plant will be capable of turning out 400,000 vehicles and engines a year. It will help the joint venture reach its goal of producing 2 million vehicles a year in China by 2015. The company said Wednesday it wouldn't decide which models to make until closer to the start of production.

The new factory will be in Chongqing city in central Sichuan province. The venture's other two plants are located in Liuzhou in southern Guangxi region and Qingdao, on China's northeastern coast.

China has been the world's biggest auto market by vehicles sold since 2009, when it surpassed the United States. Some 18.5 million vehicles were sold in China last year and automakers expect the number to rise to 30 million by 2020. Foreign automakers have been expanding in China to offset flat or declining growth at home.

But slowing sales growth in China is prompting global automakers to look for new ways to tap the faster-growing low end of the market in smaller cities and the countryside.

SAIC-GM-Wuling is benefiting as rising incomes in those areas drive demand for the mini-trucks and microvans that it's focused on making. The venture has sold 1.31 million vehicles in China so far this year, compared with 1.28 million for all of 2011.

The joint venture, which also makes cars under GM's only-in-China discount line Baojun, last week opened a $1.3 billion factory at its Lizhou facility to make cars for that brand.

Shanghai-based SAIC Motor Corp. owns 50.1 percent of SAIC-GM-Wuling, while GM China owns 44 percent and Liuzhou-based Wuling Motors owns 5.9 percent.

The joint venture is one of several GM has in China, where foreign carmakers are required to team up with local partners. The company's Chinese brands include Buick, Cadillac, Chevrolet and Opel as well as Jiefang and Wuling.