Posted on 11/04/2003 11:54:24 AM PST by Tumbleweed_Connection
SHANGHAI, China (AP) - It's time for the communist cadres' Red Flag limos to pull over. Cadillacs are on the way. General Motors Corp. said Tuesday it plans to boost its manufacturing capacity in Shanghai by 50 percent to build Cadillacs, expanding its push into the luxury end of the world's fastest growing auto market. GM, which already markets Buicks and Chevrolets here, said it would sell both imported and domestically assembled Cadillacs. To meet rising demand, it plans to expand production capacity at its factories in Shanghai and in southern China. Producing Cadillacs inside China would allow customers to avoid high import duties. "We are excited about expanding our presence in China in order to keep up with the rising demand for vehicles, especially passenger cars," said Rick Wagoner, GM's chairman and chief executive officer. GM did not provide details on its plans for the Cadillac, including which of the eight models it will sell here, how much they will cost or how many the company expects to sell. The chunky Red Flag limousines that once swept Communist Party functionaries through empty boulevards have given way to a wide array of autos, from tiny Suzuki Altos to top-of-the-line luxury models. The fuel-hungry Cadillac, with its sleek but capacious lines, has long been a trapping of American affluence. It would stand out even more dramatically on the pothole-rich streets of China's chaotic cities, giving members of the new moneyed class another way to flaunt their wealth. Competition for China's fast expanding market has been heating up, with GM, Ford, Honda, Nissan, Toyota, BMW and DaimlerChrysler all recently announcing plans to expand capacity to keep up with explosive demand. Vehicle sales in China soared 30 percent in the first nine months of this year. GM, which claims an 8.2 percent share of China's vehicle market, says its sales by late September had already surpassed the total for last year, with 267,395 cars sold. The world's biggest car maker started with Buicks at the Shanghai plant in 1998 and says it has invested over $2 billion in the country through a number of joint ventures, which now make domestic brands as well as Buicks and Chevrolets. Cadillacs will be assembled alongside Buicks at GM's Shanghai plant, which will hike capacity by 50 percent to 300,000 vehicles by the end of 2005, the company said. The Shanghai factory began round-the-clock production in August for the first time. GM's joint venture plant with Shanghai Automotive Industry Corp. and Wuling Automotive in southwestern China's Guangxi region is to increase its annual capacity by 150,000 vehicles to 336,000 by 2006. The automotive market is proving so seductive that recently a major Chinese appliance maker, GD Midea Holding Co., announced it plans to invest up to $240 million on truck and bus factories. China announced its ambition to nurture a world-class auto industry by 2010 but has at the same time signaled it wants to curb excessive investment in inefficient, small-scale factories scattered around the country. Despite soaring sales, analysts already are warning of a glut in production. According to the China Automobile Industry Association, output of domestically made cars will hit 4.3 million this year, while sales are forecast to reach only 1.9 million.
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