General Motors Co invests 12 billion dollars to compete with rivals in China

General Motors Co, the worlds third largest car manufacturer by sales, announced it will invest $12 billion in China through 2017 and build more factories in 2015 as it tries not to fall behind its rivals, and particularly Volkswagen AG.

The U.S. car manufacturer expects to achieve sales growth of between 8% and 10% in the current year, matching the overall growth of the Chinese auto market, whereas Volkswagen will aim at a 10%-expansion from last years record, or above 3.5 million cars. Outselling GM in China in 2013 helped the Wolfsburg, Germany-based company surpass GM as the worlds second-largest car manufacturer.

General Motors announced on Sunday it plans to open five new plants in China next year as part of its leaderships plan to raise manufacturing capacity by 65% through 2020. Domestic market is expected to expand by 8-10% this year, however trailing 2013s 13.9% growth when 21.98 million units were sold. In comparison, the US market grew by 7.6% in 2013 to 15.6 million vehicles sold.

Matt Tsien, president of GM China, said at the Auto China show in Beijing, cited by Reuters: “We are investing wisely and accelerating our vehicle development and manufacturing to keep pace with market demand. In total we are investing $12 billion between 2014 and 2017.”

General Motors will build four new car assembly plants in Shenyang, Chongqing, Jinqiao and Wuhan and an engine plant in Shenyang. The company aims to sell 100 000 of its flagship Cadillac sedans, which will be assembled in the Jinqiao plant, through 2015, up from 50 000 in 2013. GM is betting on robust growth of its luxury brand and plans to launch two new models in 2014 and 2015.

GM also chose the Beijing auto show to reveal its redesigned Chevrolet Cruze sedan, which was Chevys top-selling model in China last year. General Motors is unveiling another five new or revamped models under the Chevrolet brand this year. According to Matt Tsien, the US car giant will introduce over 60 new or refreshed models through 2018.

Meanwhile, GMs most significant rival in China, Volkswagen AG, will release more than 100 new or revamped models through next year as part of its strategy to overcome Toyota Motor Crop as the worlds largest car manufacturer by 2018. A significant part of the German car manufacturers goal will be to further expand its market share in China.

Volkswagen said it should have around 3 600 dealerships in China by 2018, or 50% more from now. The company also plans to introduce a range of low-to-zero emissions models in order to meet rising demand for such vehicles in the country, and especially in the larger cities.

Meanwhile, Rupert Stadler, Audis CEO, said for Reuters that Volkswagens luxury brand will raise the number of its dealerships by 50% to 500 in the next three years, aiming to expand sales in smaller megacities in central and western provinces.

General Motors Co settled 0.03% higher on Thursday in New York to close the week at $33.98 per share, marking a one-year change of +16.09%. The US car giant is valued at $54.02 billion. According to the Financial Times, the 15 analysts offering 12 month price targets for General Motors Co have a median target of $46.00, with a high estimate of $50.00 and a low estimate of $32.00. The median estimate represents a 35.37% increase from the last price of $33.98.