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Automakers Closing in Detroit, Open in Shanghai

Monday, 20 Apr 2009 09:49 AM

Dealing with the crisis at General Motors Corp. kept new CEO Fritz Henderson from traveling to Shanghai's auto show, but executives say the company intends to continue growing in China regardless of how its financial mess is resolved.

"Of course, China remains a key market for GM," Nick Reilly, president of GM's Asia-Pacific division, said on the sidelines of the Shanghai Auto Show, which opened Monday. "We will continue to invest in new products for China, in new facilities and the latest in technology," he said.

While it scales back elsewhere, Detroit-based GM is aiming to double sales in China to about 2 million within the next five years, whether it ends up in bankruptcy protection or not, said Kevin Wale, president and managing director of the GM China Group.

"It is very important to understand that if there is a court-ordered restructuring, it is different than in some other countries," Wale said. "A company continues to trade and continues its business and can come out of it stronger than before."

Success in China, the world's second biggest auto market after the U.S. and perhaps soon to be the leading market, is crucial for GM's future.

In China, where total vehicle sales hit a monthly high of 1.1 million in March, GM expects to grow 5 percent to 10 percent this year.

The company's China sales jumped nearly 25 percent last month - to 137,000 vehicles - thanks largely to soaring minivehicles sales by its joint venture SAIC-GM-Wuling, which is benefiting from tax cuts and other policies aimed at spurring sales of small, fuel-efficient cars.

Underscoring China's importance to GM, Henderson had planned to attend the Shanghai show despite the pressing June 1 deadline for completing restructuring plans set by the U.S. government.

But he canceled late last week, deeming the U.S. situation his top priority, the company said.

Shanghai is the location for GM's decade-old joint venture with state-owned Shanghai Automotive Industrial Corp.

Reilly acknowledged that GM's precarious financial state makes planning for the future somewhat uncertain.

"We know, however, that there will be no disruptions to our operations here in this region," he said.

GM has had to scale output back and put off or slow projects in some Asian markets due to the impact of the global slowdown, but it is still looking for chances to grow.

It also is in discussions about financing with other governments, including Thailand, Korea and Australia, Reilly said.

But GM's China operations do not expect or need any help from the U.S. or elsewhere, Wale said.

The company remains profitable here and is able to reinvest in its facilities. As it strives to meet its future targets, it may even open another plant in mainland China, he said.

"There is no decision on where it will be when it will be or with whom," Wale said. "To meet the goal of selling 2 million units you have to build them."

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Dealing with the crisis at General Motors Corp. kept new CEO Fritz Henderson from traveling to Shanghai's auto show, but executives say the company intends to continue growing in China regardless of how its financial mess is resolved."Of course, China remains a key market...
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2009-49-20
 

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