GM: China approves new Cadillac factory

A Cadillac salesmen talks with a potential customer as the US manufactured car is promoted at a shopping mall in Beijing on October 21, 2011. The politically sensitive US trade deficit with China rose to a record level in August, according to figures produced by the Commerce Department. As Congress weighs hitting Beijing with sanctions over its currency policy, the department said the deficit with China stood at $29 billion in the month, passing the previous record set in August 2010. AFP PHOTO / Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)

BEIJING General Motors Co. (GM) said Wednesday its main Chinese joint venture has received government approval to build a Cadillac factory as part of GM's efforts to expand its share of China's luxury auto market.

Plans call for the 8 billion yuan ($1.3 billion) factory in Shanghai to begin production in 2015 with an annual capacity of 150,000 vehicles, according to GM spokeswoman Dayna Hart.

GM sells imported Cadillacs in China but the luxury market is dominated by Germany's Mercedes Benz, BMW and Audi.

Automakers and industry analysts say luxury cars, along with SUVs, should be the fastest-growing parts of China's auto market.

Sales of luxury cars rose 12 percent last year to 675,000 vehicles, according to LMC Automotive, a research firm.

The president of GM's China arm, Bob Socia, said last month that one of the automaker's priorities in China is to expand Cadillac's small market share.

"We've got our sights set on the luxury market," said Socia at the Shanghai auto show. He said Cadillac will introduce a new model in China each year through 2016.

The Cadillac factory is being built by Shanghai GM, the American automaker's joint venture with state-owned Shanghai Automotive Industry Corp.

Also Wednesday, GM opened a factory in Indonesia in Bekasi, on the outskirts of the capital, Jakarta, to manufacture its Chevrolet Spin, a seven-seat subcompact multipurpose vehicle.

The $150 million facility employs 700 people and will have an annual production capacity of 40,000 vehicles, according to GM. It said 20 percent of production will be exported to Thailand and the Philippines, with the rest sold in Indonesia.