GM rolls out first Buick at Shanghai plant
By William Kazer
SHANGHAI, Dec 17 (Reuters) - General Motors Corp on
Thursday rolled out the first Buick built at its $1.52 billion
Shanghai joint venture, accelerating its drive into the Chinese
car market as competitors appeared to be stalling.
With GM chairman Jack Smith behind the wheel and Chen
Xianglin, head of Chinese partner SAIC at his side, a white
Buick rolled off the assembly line to the applause of more than
1,000 guests and blue uniformed workers.
"This is a proud moment for us at General Motors," the
beaming U.S. auto executive told guests at ceremonies marking
the occasion.
"This plant is a model of the automotive industry of the
future."
But the future of China's auto sector is clouded by
economic woes stemming from sluggish domestic demand and the
Asian financial crisis.
Economic growth is lagging below a targeted 8.0 percent for
the year and consumer spending has taken a nosedive.
Car sales rose only 3.7 percent year-on-year in the
January-September period compared with a 27.2 percent gain in
the same nine months of 1997.
China's big banks have tried to kick-start sales with an
auto loan programme but so far consumers are holding on to
their cash.
GM is also racing ahead with a top-of-the-line model when
consumers appear to be spending on less expensive cars.
Officials said the locally built Buicks, based on the North
American Regal and Century, would cost 300,000 to 400,000 yuan
($36,000-$48,000).
China's most successful automaker, Shanghai Volkswagen,
sells its popular Santana sedan for about 120,000 yuan.
The GM project was nailed down after lengthy negotiations,
gaining a final push from U.S. Vice-President Al Gore who
attended the signing ceremonies in Beijing in March 1997.
Groundbreaking was in June last year and formal production
is scheduled to start in April next year.
The importance of the project to China was underscored by
the wealth of dignitaries at GM's cavernous plant, bedecked
with red, white and blue bunting and adorned with a huge red
carpet.
Shanghai's Communist Party chief Huang Ju, Mayor Xu Kuangdi
and as well as top planning and auto officials from Beijing
were on hand as was U.S. Ambassador to Beijing James Sasser.
The venture is Shanghai's biggest foreign investment
project and one that is hoped will spur related manufacturing
needed to consolidate the city's role as an automotive centre
for China.
"The automotive sector is a pillar industry for Shanghai,"
Mayor Xu told assembled guests.
"To speed development of the automotive industry is a key
strategy," he said.
General Motors has 50 percent of the Shanghai project while
state-run SAIC, or Shanghai Automotive Industry Co, has 31
percent. SAIC's Shanghai-listed subsidiary Shanghai Automotive
Co <600104.SS> holds the remainder.
SAIC, while joining hands with GM, also has the unusual
role of acting as partner to German automaker Volkswagen.
Shanghai GM will produce 20,000 Buick sedans next year and
eventually reach annual capacity of 100,000 cars.
"We remain very confident of our sales forecast," executive
vice-president Philip Murtaugh told reporters.
But industry sources said GM was hoping to gain permission
from Beijing, which maintains tight controls on the auto
market, to build a smaller and cheaper car as well.
Officials have been cautious about predictions of when the
plant would be profitable, saying in the past they believed
profits would be on schedule.
($1 = 8.28 yuan)
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