The Baojun 630 targets the next wave of new Chinese car buyers.
Hoping to maintain its role as the Chinese market’s sales leader, General Motors has opened up a new assembly plant primarily aimed at the next generation of buyers in cities just beginning to share in China’s fast-growing economy.
The factory, in the southern city if Liuzhou, will be used to build the Baojun 630 midsize sedan. The Baojun brand was launched just over a year ago as a joint venture between General Motors and its existing Chinese partners, Shanghai Automotive Industries Inc., or SAIC, and Wuling Motors. The three have been operating jointly as SGMW.
Until now, China’s automotive boom has largely focused on major cities along the Pacific coast, including Shanghai and Beijing. But demand is rapidly growing in central and western “Tier 2” and “Tier 3” cities just beginning to share in the country’s economic expansion. Baojun is especially focused on first-time, entry-level buyers.
The total investment for the first phase of the plant is $1.28 billion and the 2 million square-foot facility has set an annual manufacturing capacity of 400,000 units by utilizing GM’s Global Manufacturing System and other world-class systems and processes.
SGMW’s indigenous brand began offering the Baojun 630 in August 2011. It added the Le Chi minicar earlier this year. The objective is to appeal to Chinese buyers, particularly in smaller cities and rural areas, looking for economical transportation.
“SGMW has recorded many achievements in the space of 10 years,” said Bob Socia, president, GM China, and Chief Country Operations Officer, China, India and ASEAN. “It has set a global benchmark for low-cost, high-value manufacturing. Its new facility will help ensure its continued growth in the world’s largest vehicle market.”
“The passenger car production base represents the latest milestone for our joint venture,” added SGMW President Shen Yang. “It will lay a solid foundation for the expansion of SGMW’s important passenger car business.”
SGMW also plans to enhance its research and development capability after the passenger car production base is completed, integrating engineering design and testing resources, and establishing a systematic capability for product development and technical research. The aim is to fully support the overall development strategy of SGMW by helping it achieve 2 million annual vehicle sales, grow its export business and enhance its technology by the end of China’s 12th Five-Year Plan period.
SGMW was established on Nov. 18, 2002. SAIC has a 50.1% stake, GM China a 44.0% stake and Wuling Motors a 5.9% stake. The joint venture, which is based in Liuzhou, manufactures and sells a range of Wuling brand mini-trucks and minivans as well as the Baojun passenger car brand. In 2011, SGMW sold 1,285,820 vehicles in China. GM itself is targeting sales of 5 million vehicles in China by mid-decade, a figure that would include its various joint ventures.