GM to export China-made engines to Canada by 2003

SHANGHAI, November 1, 2002; Reuters reported that General Motors said on Friday its Chinese joint venture will start exporting advanced engines to Canada by late 2003 as the world's largest automaker gears up to launch a compact sport utility vehicle globally.

GM's venture with the Shanghai Automotive Industry Corp (SAIC), Shanghai GM, will supply 3.4 litre V-6 engines for GM's new Chevrolet Equinox SUV, to be manufactured by GM's Canadian venture with Japan's Suzuki Motor Corp in 2004.

The export programme would affirm Shanghai GM's position as one of China's most advanced car plants and integrate the venture, which now mostly makes cars and engines for a galloping domestic market, into GM's global logistics structure.

GM and Suzuki's CAMI Automotive Inc venture in Ontario, Canada will begin selling the Chevrolet Equinox -- a more compact version of the traditional SUV -- by 2005.

GM, which has said its Chinese ventures would export increasing numbers of cars in future, is spending more than C$500 million ($322 million) on its Ontario plant.

"We don't have enough short term local capacity in North America to accommodate this active demand and we do want to capture the market opportunities," said GM spokeswoman Daphne Zheng in Shanghai.

"We're looking around the world and Shanghai GM has this available capacity, which is great because we can leverage to make more efficient use of our capacity."

Shanghai GM can make up to 180,000 V6 engines a year, but Zheng declined to say how many would be Canada-bound.

The venture now makes 2.5 and 3.0 litre engines for the Chinese market, one of the world's fastest growing with demand expected to leap 40 percent to one million cars this year.

"An overriding goal of Shanghai GM since its establishment has been to become a globally competitive automaker. The export of engines to North America represents a milestone," said Chen Hong, president of Shanghai GM.

Global automakers have flocked to the mainland over the past year, and some, such as Nissan Motor Co, are considering taking advantage of China's lower production costs to export vehicles to the rest of the world.

Exporting engines to Canada would help SAIC's foreign ambitions. The automaker, China's third-largest, is planning to spend $59.7 million on a 10 percent stake in a future GM-Daewoo tie-up.