Saturday, November 25, 2006

GM considers auto exports from China, production venture in Poland

Saturday, November 18, 2006
GM considers auto exports from China, production venture in Poland
Christine Tierney / The Detroit News

BEIJING - General Motors Corp. may use China as an export base in a few years, selling Chinese-built cars in other countries -- and it has already exported a small number of vehicles produced at its Chinese joint ventures.

"We exported some products to Chile this year, and 1,000 or 1,200 cars to Russia," Nick Reilly, president of GM's Asia Pacific region, told reporters Saturday at the Beijing auto show. "We've proven that we can do it."

Most global automakers with Chinese manufacturing operations are not currently exporting vehicles and are struggling just to keep pace with surging domestic demand.

But DaimlerChrysler revealed a year ago that it was considering adding a Chinese-built car to the Chrysler Group's U.S. lineup. Chrysler CEO Tom LaSorda confirmed Saturday that the company was in talks with two carmakers, including China's Chery Automobile, and hoped to conclude a deal by the end of the year.

Up to now, GM wasn't tempted to export vehicles built in China because production costs here aren't as low as people believe. Wages are low but overall operations are "not yet at world levels of competitiveness," Reilly said.

Last year, after Honda Motor Co. of Japan first began exporting small Fit cars built in the Chinese city of Guangzhou, Honda executives said the same car cost less to produce in Japan.

Part of the trouble is that, while Chinese suppliers are improving quality and productivity fast, they're still not as efficient as global suppliers. "We think there's a fair way to go in terms of the competitiveness of the supply industry," Reilly said.

"However, that will change," he said. "In five years, I can see us growing exports from China."

Both GM and Ford Motor Co. are increasing their purchases of Chinese-built components to lower their costs, and GM has equipped its Equinox sport-utility vehicle with a Chinese-built engine.

At this stage, Ford is not considering exporting vehicles from China, said John Parker, Ford group vice president in charge of the Asia Pacific and Africa operations.

The Dearborn automaker came later to China than GM and its share of China's car market is less than a third of GM's.

"We're focused on the domestic market," Parker said. "We're adding products to the portfolio. We're building our brand, and we're building our dealer network. That has got us [occupied] flat-out."

Buoyed by China's growing economy and rising incomes, auto sales are up 30 percent so far this year. Analysts predict the market will grow from 7 million vehicle sales currently to 10 million by the end of the decade.

By then, most industry experts expect Chinese automakers will be exporting cars in substantial numbers. "They have come a long way, and we'd be foolish not to consider them serious competitors in the future," Reilly said.

In a separate effort to establish low-cost operations, GM is in talks with UkrAuto, a Ukrainian manufacturer, about the possibility of producing GM Daewoo products in Poland, he said. "They would potentially build a vehicle for GM Daewoo."

© Copyright 2006 The Detroit News. All rights reserved.


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