NEWS

Guangzhou Automobile Group to invest 6 billion yuan ($968 million) to open 2 factories

Monday, Apr 20, 2015

Guangzhou Automobile Group Motor plans to spend roughly 6 billion yuan ($968 million) on two new factories in an aggressive expansion push despite a slowdown in the world's largest car market, the company's top executive said on Sunday.

The Chinese automaker, the subsidiary of Guangzhou Automobile Group Co responsible for production of its GS series of own brand cars, will open the plants in 2016 and 2018 with initial annual capacity of 200,000 each, General Manager Wu Song told Reuters.

"In the rapid growth of Chinese car market in the last four years, we were laying a foundation, building our core competitive strengths, for example in R&D, manufacturing, quality and efficiency controls and sales," Wu said.

"Under the new economic normal, this is the GS brand's high growth opportunity."

Wu said he believes the automaker will be helped by the government's encouragement of national brand champions and push for higher safety standards.

The automaker has yet to choose its new locations, although both factories will be outside of Guangdong province where it currently produces cars, he said.

An expansion of their existing plant will also help the company to reach its goal of producing 500,000 cars by 2017. It has stated previously it is targeting 1 million cars annually by 2020, he said.

Those are major increases from its aim of producing 160,000 to 200,000 cars this year.

Guangzhou Auto is pursuing such a bold ramp up in capacity despite China's economic growth dipping to the lowest levels in a quarter century and dragging on car sales.

Vehicle sales grew only 6.9 percent in 2014 with 7 percent growth expected this year, after years of double-digit growth, according to the China Association of Automobile Manufacturers.

Guangzhou Auto is also searching for dealership partners in the United States and is researching how to comply with regulations to prepare for its planned 2017 launch there, Wu said.

The company plans to release the GS4 SUV in the U.S. market first, he said. The car began selling in China on Saturday.

In addition to selling under its own marque, parent company Guangzhou Automobile Group makes cars through joint ventures with Toyota Motor and Honda Motor, which have suffered in recent years as anti-Japanese sentiment flared in China.

The group overall was the sixth largest car manufacturer in China last year.

 

reuters.com

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