Despite the fact that China’s economic growth has slowed, General Motors and Ford Motor Co. continue pushing ahead with plans to expand their production footprint there.
Mark Fields, Ford’s chief executive officer, told analysts this week thatFord expects the Chinese economy to grow by 7% to 7.5%, which is ample enough to sustain an increase in sales of new vehicles. Ford expects sales to come in at between 24 million and 26 million units and the automaker, with its Chinese partner, is moving ahead with plans to open two new factories in China this year.
Ford plans to open both an assembly plant and an engine plant in China this year. Ford sales in China grew 19% in 2014 to 1.1 million units and helped maintain the profitability of Ford overall operations in the Asia Pacific region despite losses in other parts of the region.
GM, which has slipped behind Volkswagen in China, announced its principal partner in China, Shanghai GM, opened a new assembly plant in the Yangtze River metropolis of Wuhan.
Shanghai GM’s new manufacturing base in central China’s Hubei province represents an initial investment of $1 billion. The new Wuhan plant has an annual manufacturing capacity of 240,000 vehicles for sale across China by Shanghai GM.
The Wuhan Branch includes press, body, paint and general assembly shops as well as support facilities. It is leveraging GM-designed manufacturing processes and technology, 452 robots and an automation rate of 97% in its body shop. In line with Shanghai GM’s Drive to Green strategy, the plant has also adopted environmentally friendly technology.
Shanghai GM also announced the start of construction of the second phase of the Wuhan Branch. The second phase will represent an investment of an additional $1 billion. It will include press, body, paint and general assembly shops.
(New sales record can’t push GM past VW in China. For more, Click Here.)
The second phase will double the plant’s manufacturing capacity when it starts production in 2017. Powertrain projects worth about $1.2 billion are planned at the facility as well, GM said in its announcement.
(Click Here for details about GM’s prediction of increased profitability in 2015.)
The Wuhan Branch is Shanghai GM’s fourth manufacturing site, joining its original Jinqiao facility in Shanghai; Shanghai GM Dong Yue Motors and Shanghai GM Dong Yue Automotive Powertrain in Yantai, Shandong; and Shanghai GM (Shenyang) Norsom Motors in Shenyang, Liaoning.
(To see what hit Ford’s earnings the hardest in 2014, Click Here.)
Shanghai GM is a joint venture between GM and SAIC that was established in 1997. It builds, imports and sells a comprehensive range of Buick, Cadillac and Chevrolet products. In 2014, Shanghai GM sold a record 1,710,025 vehicles in China.
Overall, GM’s deliveries in China rose 12% to a record 3,539,972 and the company’s estimated market share increased 0.6 percentage points to 14.8%. Chevrolet, Cadillac, Buick, Wuling and Baojun all set annual sales records.
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