GM makes $1.3B Cadillac bet on China with new factory


SHANGHAI: General Motors (GM) will build a $1.3-billion Cadillac plant in Shanghai after China approved the project, the carmaker said last week as it seeks more luxury sales in the world’s biggest car market.

Construction of the plant—which will have an annual capacity of 150,000 vehicles—will start in June, GM said in a statement. The factory, the first in China dedicated to making Cadillacs, will come under Shanghai GM, a joint venture with China’s SAIC Motor.

The huge investment marks a bet that GM, the largest US carmaker, will be able to win a larger piece of China’s rapidly growing luxury vehicle market, in which German brands hold an estimated 80-percent share.

China’s luxury-car sector is dominated by German carmakers such as Audi, BMW, Mercedes-Benz and Volkswagen though other European, Japanese and US brands are bringing greater competition, analysts say.

China’s market for what the industry calls “premium” cars—costing from $32,000 to $190,000—was 1.25 million vehicles last year, second only to the US, according to consultancy firm McKinsey.

Premium car sales in China grew at an average 36 percent a year in the last decade, though that would slow to an annual 12 percent through 2020, McKinsey said in a report in March.

GM had launched a Cadillac sedan, the XTS, in China earlier this year as it seeks to make inroads into the sector. That vehicle, priced from $56,800 to $92,500, is produced in China. The firm plans to introduce one new Cadillac model a year through 2016 to boost annual sales of the marque from around 30,000 vehicles last year to 100,000 by 2015, a GM official said last month.



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