China to import more cars, auto parts from US

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Last updated at: (Beijing Time) Thursday, November 13, 2003

China to import more cars, auto parts from US

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GM, Ford to export thousands of vehicles to China

A delegation from China's auto industry and DaimlerChrysler signed letters of intent on Wednesday evening, in a move expected to boost United States exports and distribution of passenger vehicles to China. Earlier in the morning, the delegation signed an agreement with General Motors and Ford to import cars and auto parts worth more than 1.3 billion dollars.

DaimlerChrysler plans to export about 4,500 vehicles to China, including vehicles from the Chrysler Group and the Mercedes-Benz M-Class built in the United States. totaling in value about 300 million US dollars.

The signing of these letters is an important step in efforts to increase the export and distribution in China of Chrysler, Jeep and Mercedes-Benz vehicles, and significantly complements the company's future business plans there, said Dieter Zetsche, the Chrysler CEO.

"Our strategy in China - importing, building and selling passenger cars and commercial vehicles - will help ensure that we take advantage of many business opportunities in the world's fastest-growing automotive market," he said.

GM, Ford to export thousands of vehicles to China (2)

Vice Minister of Commerce Ma Xiuhong said the signing of the letters showed that further cooperation between the auto industries of China and the United States is based on equality and mutual benefit.

There had been wide cooperation on auto technology, production and trade between China and the United States in the past several years, and the market share of American vehicles in China grew rapidly in recent years, she said.

The Chinese delegation from the auto industry, headed by Ma, also signed agreements with Ford Motor Corporation on Wednesday to import cars and auto parts worth a total 200 million US dollars.

Earlier in the morning, the delegation signed an agreement with General Motors and Ford to import cars and auto parts worth more than 1.3 billion dollars.

The top two US automakers announced plans to export thousands of vehicles to China as that country moves to open up its market to foreign competition. General Motors Corp. and the Ford Motor Co. announced they had signed agreements with their joint venture partners in China to export vehicles between now and 2006.

GM said it would export more than 5,000 of its luxury Cadillac and Buick models in 2004 and 2005, both through its China-based subsidiary, GM China, and independent Chinese importers. Thousands more units will be assembled in China by GM's joint venture partners using components and kits made in the United States. The deals have a combined value of 1.3 billion dollars.

"As vehicle ownership grows in China, the luxury segment is beginning to open up," GM chief executive officer Rick Wagoner said in a statement.

"We at GM believe that now is the right time for us to introduce our Cadillac luxury brand to China. Today's comprehensive agreement also indicates the seriousness of our intention to be a major player in China."

GM is also seeking permission for its automotive sales-financing arm, GMAC, to go into business in China. The unit has filed an application for a licence with the China Banking Regulatory Commission jointly with its intended partner, Shanghai Automotive Group Finance Co. Ltd. (SAICFC).

Meanwhile, the Ford Motor Co. said it will begin shipping the first of 5,250 US-built units later this year under newly granted export licences.

The automaker has not decided what models or brands it will supply, but it is "leaning towards sport utility vehicles," said Ford spokesman Chris Vinyard.

The Chinese automotive market is booming: last year, motor vehicle sales surged an astounding 60 percent in China, and though the pace has slowed a bit in 2003, the numbers are still growing at an annualized rate of 50 percent.

For the full year, that would mean sales of 4.4 million cars and trucks -- modest by US standards -- but nearly double the 2001 figures.

Few anticipate that torrid growth rate to continue, but barring an economic meltdown, China is expected to soon pass Japan as the world's second-largest national automotive market.

It's all happening "much faster than we'd ever expected," said Jack Smith, the recently retired chairman of General Motors, who was the architect of the automaker's aggressive investment program in China.

GM has an eight percent share of the Chinese market where it benefits from high prices and strong profit margins, according to Merrill Lynch.

Analysts had been expecting the resurgent automaker to announce an increase in capacity, although some questioned the decision to lead its offensive with luxury vehicles.

"Most of the core demand is medium segment," said Ashvin Chotai, director of Asian Automotive Research at Global Insight, "so I don't expect the volume to be that big."

GM executives heralded the export licences as a breakthrough in their quest to conquer the booming Asian market.

"This has created opportunities that were unimaginable a few years ago," said Phil Murtaugh, chief executive officer of GM China Group.

"We have built up the largest product line up in China of any automaker."

Ford Motor Co. is also bullish on the Chinese market, although it was slow to jump in, only beginning production of passenger cars last January after finally landing a joint venture deal with China's second-largest automaker, the Changan Automobile Group.

However, Ford chief executive officer Bill Ford announced plans last month to invest another 1.5 billion dollars in China.

Among other things, that will finance a second assembly plant and boost output from 20,000 to 150,000 vehicles annually. (Agencies/China Daily)

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