GM looks to build luxury car in China
(CNNMoney.com)
Updated: 2006-09-30 07:15

NEW YORK -- General Motors is planning to build a long luxury car in China, according to a published report.

The automaker's joint venture with Shanghai Automotive Industrial Corp. has become the leading seller of autos in the fast-growing Chinese auto market, according to a report in July from the official Xinhua News Agency.

But the joint venture has focused on building small compact cars for that market. GM (Charts) has actually exported some of the luxury cars from U.S. factories to China since it started to make a bigger push there.

The Detroit Free Press reported Friday that GM Vice Chairman Bob Lutz said the company plans to use its new rear-wheel drive auto platform to build a model known as the Buick Royaume in China. A time frame for production of the new car was not given.

The car will use GM's new "zeta" rear-wheel drive architecture. GM began assembly of the first car from the program, the Holden VE Commodore, earlier this year in Australia, the paper reported.

The platform will form the basis of the new Chevrolet Camaro and a number of other cars for GM's brands in North America, Lutz told the paper.

China has become an increasingly important market for GM as it tries to deal with market share losses in its core North American market.

The company announced that its joint venture's Chinese sales accounted for about 12 percent of that market in the second quarter, good enough for the No. 1 position in that market. The sales came to about 840,000 vehicles, up just more than 25 percent from the year ago period.

China now accounts for about two-thirds of GM's sales in the Asia-Pacific region. And Asia Pacific was its most profitable region.

All the major global automakers are making a push in China, which saw 19 percent year-over-year growth in vehicle sales in the second quarter, according to GM. All are working with Chinese partners.

A joint venture between Volkswagen and Shanghai Automotive Industrial Corp. is the No. 2 seller of cars in China behind the Shanghai GM effort, according to the Xinhua News Agency report. Japanese automakers Toyota Motor (Charts) and Honda Motor (Charts) are also in the top 10 of the widely splintered Chinese market. U.S. automaker Ford Motor (Charts) is not in the top 10 ranking, though.

A separate report from Reuters on Friday said DaimlerChrysler (Charts) is in detailed discussions with China's Chery Automobile, the No. 4 Chinese automaker, to make cars for sale in the United States and other markets and could finalize the deal soon.