General Motors opens a new manufacturing plant in Liuzhou, China
General Motors Company, the American multinational automobile corporation, has devised an aggressive market strategy with the help of local partners in the Chinese auto market. On November 18, 2012, the car maker opened the doors of another manufacturing unit for its low cost Baojun brand in Liuzhou. The new production unit for low cost Baojun models in Liuzhou is based in the southern part of China and assembles four-wheelers, which are priced as low as 40,000 Yuan or $ 6,400.
General Motors has automobile related operations, such as manufacturing and distribution in several international markets through Joint Ventures (JV) and direct subsidiaries, outside the home turf (United States). Interestingly, the American auto major has 10 JV in China alone, prominent among them being Shanghai General Motors and SAIC - GM - Wuling Automobile.
Evidently, a huge portion of competition in Chinese car market is focused on low cost products that are dedicated at local consumers with limited earning capacities. Further, with the rapid emergence of pursuit for an affordable automobile among middle class Chinese population, the local entry-level car manufacturers like Chery and Geely are facing problems in meeting the required demand.
As per a study conducted Alix Partners, a United States based consultancy firm, over 65.5 million Chinese families are believed to have annual incomes close to 60,000 Yuan or around $ 9,600 by the end of next year. Accordingly, the demand for low cost cars is expected to shoot in the Chinese auto sector by 2013.
It has also been revealed that General Motors' latest manufacturing facility in Liuzhou has been installed with an annual production output of around 400,000 units. The company operates in Liuzhou through its local alliance, SAIC - GM - Wuling Automobile. As per top officials of American auto major's Chinese JV, the Liuzhou based facility will produce vehicles for its low cost brands - Baojun and Wuling. However, details regarding when the new plant will hit its maximum capacity remained unclear.
The company has till now invested some 8 million Yuan during the first stage of construction of its new facility. Baojun 630, the company's first vehicle to hit retail outlets in 2011, also became the first car to be produced from the new Liuzhou plant on November 18, 2012. At present, the Chinese arm of General Motors has just two products under Baojun marque, comprising a mini car called Le Chi and 630 compact sedan, which carries a starting price of 62,800 Yuan or $ 10,080.
Earlier this year, the Japanese automotive multinational player – Nissan Motor Company introduced second of five affordable models under its low cost Venucia brand, with the help of its local partner. The company expects to have a product portfolio comprising five models in the Chinese auto market by 2015. Reportedly, the Japanese auto maker has estimated to sell close to 300,000 cars under Venucia marque per year by 2015. Reportedly, General Motors' fellow American automotive player Ford Motor Company and Japanese multinational Toyota Motor Corp. have also revealed intentions to introduce low cost vehicles in Chinese car market, which will be priced between 60,000 Yuan and 70,000 Yuan.