GM To Move Deeper into China

YANTAI, China December 9, 2002; Eugene Tang and Jiang Jianguo writing for Bloomberg reported that General Motors Corp. and China's largest carmaker plan to buy state-owned Yantai Body Co., which would give the world's biggest automaker its fourth manufacturing plant in China.

"We are in talks with Yantai Body," said Daphne Zheng, a spokeswoman for General Motors China Group. "The rapid expansion of China's automotive industry has created new opportunities."

General Motors and partner Shanghai Automotive Industry Corp. may pay 900 million yuan ($108 million) to buy the maker of Lanos passenger cars, said a Shandong province official who declined to be identified. The provincial government owns the company, which is located in the eastern port of Yantai.

General Motors, Volkswagen AG and other foreign automakers are piling into China to take advantage of the world's fastest-growing auto market. Cars sales in China rose by half in the first 10 months of the year, as rising urban incomes and the introduction of credit financing put automobiles within the reach of more families.

General Motors predicts China will be the world's third-largest market in six years, behind the U.S. and Japan.

The two companies will sign an agreement with the provincial government by Dec. 20 to buy Yantai Body, the government official said. The accord will give each partner a quarter stake, with the remainder to be held by a venture both own, the official said.

General Motors now makes Buick sedans and wagons and Sail cars in Shanghai in a $1.5 billion venture with Shanghai Auto. General Motors has a separate venture in the northeastern Chinese city of Shenyang making Blazer sports-utility vehicles and pickup trucks. General Motors also owns 34 percent of SAIC Wuling Automobile Co. in southern China, which makes minivans and trucks.