The Economist - April 28, 2007
GM...is on top in...the world's most promising car market.
Sales of cars and light trucks in China reached 7.2 million in 2006, making it the second-largest national market behind America, and the fastest-growing. GM's brightest hopes now lie half a world away from Detroit in places like the southern Chinese city of Liuzhou... The factory operated in Liuzhou by SGMW, GM's joint venture with two Chinese firms, Wuling and Shanghai Automotive Industry Corporation (SAIC), is bright, clean and almost as efficient as any car-assembly line in the world. Each day it turns out more than 1,000 Chevrolet minicars and Wuling minivans, not much bigger than a Mini Cooper and starting at $3,500. Margins are slim but labor costs are only around $100 per vehicle, says Tom Drumgoole, SGMW's vice-president. SGMW's sales grew 36% to 460,000 vehicles last year, outpacing the wider market.
GM also has a separate joint-venture with SAIC, called SGM. Its prospects seemed dim when it was set up in 1997: the market was a tenth of its size today and was dominated by commercial vehicles, yet the Chinese government decreed that SGM would make cars, to be sold under the then-fading Buick brand
Another of GM's Chinese ventures is PATAC, a sophisticated design and engineering center in Shanghai operated with SAIC. This was where they designed the Buick Riviera, a sleek coupe that made its debut at this month's Shanghai Motor Show. Although it is just a concept car, its design is likely to influence new Buicks in both China and America, hints Ed Welburn, GM's design chief.
One danger for GM is that SAIC is starting to introduce new vehicles under its own brands, such as Roewe, outside the SGM joint venture. The Roewe 750