China carmaker looks to lap GM, Volkswagen

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After years of partnering with automakers, company says it will produce, export its own car, paper reports.
April 5, 2006: 11:28 AM EDT

NEW YORK (CNNMoney.com) - After years spent working with General Motors and Volkswagen, the Chinese automaker Shanghai Automotive Industry Group is now planning to go at it alone, according to a report published Wednesday.

The government-owned automaker said the move will ultimately result in the production of its own luxury sedan, which it plans to start building within the

"This is a watershed in the development of the auto industry in China," Michael Dunne, president of Automotive Resources Asia told the paper. "The Chinese formed joint ventures for one purpose: to learn how to do it themselves one day. That day is here."

During their partnership, Shanghai helped produce thousands of Buicks, Chevys as well as Volkswagen Passats, the Journal reported, at the same time gaining technical knowledge and experience from the two automakers.

A spokeswoman for the Chinese company told the paper that the move will help develop a "healthy" rivalry with GM and Volkswagen.

The news may be viewed as adding to GM's woes, which is struggling against a host of problems including an eroding market share, a $10.6 billion loss last year, a restatement of results and a potential strike at the bankrupt auto parts supplier Delphi.

In a prepared statement, GM said it "understands" Shanghai Automotive's "desire for further growth," according to the paper.

Shanghai, which is planning on releasing more details next week about its new car plans, is also hiring engineers and managers from the joint ventures, the Journal said.

The chief executive of the Chinese automaker Changan Automobile Group, which works with Ford (down $0.18 to $7.50, Research) and Suzuki, told the paper his company also plans on offering four of its own vehicles sometime next year.

The vehicle Shanghai intends to produce will be an updated version of MG Rover Group's Rover 75, according to the paper, which the company purchased the rights to before the British firm filed for bankruptcy last year.

GM (down $0.47 to $19.07, Research) shares edged lower in mid-morning trade on the New York Stock Exchange.

http://money.cnn.com/2006/04/05/news...ghai/index.htm

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