GM exec not worried about China overcapacity
Saturday, February 19, 2005
Reuters
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CAMBRIDGE, Mass. - Industry concerns about an overcrowded Chinese automobile market are "overblown", General Motors Corp.'s top executive in China said on Friday, and he predicted the country's car market will grow 10-15 percent annually for the foreseeable future.
China is the largest overseas market for GM, the world's largest automaker, and earnings from the country have helped ease the blow from growing U.S. health-care costs and losses in European automotive operations.
Massive investments being pledged by global automakers to boost production capacity in China, and slower growth in the country's car market, have sparked some concern about overcapacity.
"These reports are completely overblown," GM's China chief Phil Murtaugh said in a speech to the Asia Business Conference at Harvard Business School.
"We think going forward an estimate of 10-15 percent annual growth is very realistic and actually, a very conservative estimate."
Sales of vehicles -- trucks, buses and cars -- increased 16 percent in 2004 in China, after growth of about 40 percent in 2002 and 35 percent in 2003, GM said.
Foreign automakers including Ford Motor Co., Nissan Motor Co. Ltd. and Toyota Motor Co.p. are investing more than $13 billion in China to triple annual production to about six million cars by 2010.
While the competition in China is fierce, GM is well positioned in the market with a diverse lineup of vehicles and plans to aggressively roll out new models to "get the freshest lettuce on the shelf", said Murtaugh, chief executive and chairman of GM China.
Murtaugh bristled at the notion that Japanese automakers would be able to replicate their success at winning share in the United States with the Chinese car market.
"To be honest, we have massacred Toyota in China. ... We've gone from nothing to 10 percent market share, Toyota has gone from nothing to 1 percent market share. So what am I going to do? I am going to keep doing what we have been doing."
One of the main challenges in doing business in China was piracy, Murtaugh said, noting that GM sells its service parts at cost, because that was the only way to keep counterfeiters away.
GM has charged China's Chery Motors of copying one its vehicles in the country.
Murtaugh did not mention the Chery case by name, but said its counterfeit suit was being heard by the Chinese courts.
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