GM evaluates China export options

General Motors is considering exporting vehicles from its Chinese division to developing markets in a further sign of China’s potential to supply the world with cheaply-built vehicles.

The troubled US carmaker is evaluating whether there is sufficient demand for exports to markets such as India, Indonesia, the Middle East and South America and will make a decision later this year, Troy Clarke, head of GM’s Asian division, said in an interview.

Exports would be of the small vans and buses made by Wuling, a carmaker bought by GM and its Chinese partner, Shanghai Automotive Industry Corp, in 2004.

“No decisions have been made, but it is a very exciting opportunity,” Mr Clarke said. “I can’t tell you how excited I am about it. The emerging markets could use another $5,000 vehicle.”

He said the small vehicles, used as basic people-carriers and vans in areas of China outside the large cities, were not appropriate for developed markets.

China is becoming a source of vehicles for developing markets. Late last year exports for the first time exceeded imports in terms of numbers of vehicles. The biggest export market is Syria.

Geely, a privately owned manufacturer, presented the first Chinese car at the Detroit motor show this week. It plans to begin US sales in 2008, shortly after the late 2007 planned debut of its local rival Chery in the US.

Many analysts believe the big potential for vehicles from low-cost China to disrupt other markets would come in the event of a downturn in the Chinese market, when manufacturers might turn to exports in order to maintain their production.

Mr Clarke said GM, which became the largest producer in China last year, was running at maximum capacity, suggesting investment would be needed to start exports.

Exports could be supported by sending kits for assembly in other countries, and the Wuling models could also be made outside China if they proved successful.

The Wuling business is the second-largest in the Chinese small people-carrier market, behind Changan Auto, a joint venture partner of Ford Motor of the US. Last year Wuling sold 337,000 vehicles, increasing sales by 43 per cent.

Mr Clarke also said GM had pulled back from its aggressive pricing strategy in China and would not be making further big across-the-board price cuts.

“We have indicated as an industry we don’t think that is a good thing to do,” he said.