General Motors Corp. is investing $12 billion over the next three years in its China operations to boost annual production capacity there to 5 million units. GM China President Matthew Tsien also announced at the Beijing auto show that the company hopes to increase China-based manufacturing capacity 65 percent by 2020. Tsien said that the investment includes the construction of five new GM facilities located in Shenyang, Wuhan, Chongqing, and Jinqiao.

GM is currently in fierce competition for China’s auto market with Volkswagen AG. Volkswagen recently announced that it plans on investing $24.8 billion in its China operations through 2018. Volkswagen overtook General Motors in 2013 as the top-selling foreign automaker in China. Out of nearly 22 million new cars sold in China in 2013, Volkswagen sold 3.27 million compared to GM’s 3.1 million.

Both companies are relying on the continuing expansion of China’s auto market. Volkswagen’s luxury division Audi is targeting cities in central and western China to increase its total number of dealerships to 500. Over the next four years, General Motors plans to launch 60 new or redesigned vehicles in China, including 11 new sports utility vehicles and a new Cadillac model every year through 2016.

Posted by Catherine Matacic