GM's China spending to stay about $1 billion annually

General Motors Corp., the world's largest auto maker, said yesterday it would maintain annual investment in China of around $1 billion, helping the company's joint ventures in China to outpace the industry.

"Our investment tends to be around $1 billion a year," GM China president Kevin Wale told Reuters on the sidelines of a forum, adding that the trend would continue. "That is spread over a whole range of activities including product development."

Wale said the stable investment reflected the large scale of GM's operations in the mainland where it is the top selling foreign brand in the world's fastest-growing market.

The company claims about 11.8 per cent of the Chinese domestic market, the world's second largest automotive battleground, and hopes to exceed 15 per cent growth this year.

"We would expect it to be in excess of 15 per cent again this year," said Wale, who admitted that GM has historically underestimated growth in the Chinese market by about half.

GM competes with Volkswagen AG in the highly competitive mainland market, where it saw sales jump 31.8 per cent last year from 2005.

The company works with Shanghai Automotive Co. in China, where Wale expects stiff price competition to continue.

"The biggest problem is competitors," he said.

"Price competition will continue being a challenge, there is no question."

To help offset that pricing pressure, most auto makers are moving to higher-priced vehicles, which carry wider profit margins.

In 2006, the maker of Buick and Chevrolet brands introduced several new models, including the Cadillac SLS luxury sedan in China.

GM offers about 30 different models spread over six brands in China and plans on introducing a hybrid vehicle into the mainland next year.

"We will continue to introduce high-technology solutions for China," said Wale.

China is one of the few bright spots for GM, which lost $91 million in the third quarter following a $10.6 billion loss last year, as it lost crucial US market share to Toyota Motor Corp. and other Asian brands. Its global sales fell 2.5 per cent in the first nine months of 2006.