GM To Add Chinese Production Capacity, Increase Exports

Despite fears of building overcapacity in the Chinese market, GM is still very much enamored of its chances in the Middle Kingdom. Terry Johnsson, vice president of the automaker’s China operations tells Reuters

We sold everything we could build in 2010 and the same holds true in 2011. We could actually sell more than we will be able to (build) if we are not capacity constrained. We are actually short of capacity. The total business is going to go up by the size of a single plant. It’s not just about this year. We’ll have to look about a real rapid increase in our capacity

After all, the Chinese market may have slowed to a “mere” 10-15%, but GM’s sales were up by 20% last year as foreign automakers solidified their hold on the Chinese market. And even if the Chinese market does hit a wall (crazier things have happened), China’s desire to boost exports of its domestically-produced cars will help justify further investments in Chinese production capacity. Johnsson adds that GM will a “substantial amount” of its made-in-China Chevy Sail to emerging markets over the coming years, a decision that further justifies an investment in Chinese capacity. Only 5k Sails were exported last year (to Chile), but exports should rise to 20k units this year. Still, even those increased numbers pale in comparison to Chevy’s 125,625 Sails sold in China last year. But GM is already looking at shipping knock-down kits of the Sail abroad as it looks to increase Sail exports beyond even the 20k units planned for next year. After all, if The General has to bump UAW workers into the second tier to build subcompact cars in the US, production of low-cost cars like the Sail will have to stay in China for the forseeable future.