GM drives up its ambitions

GENERAL Motors Corp may build a wholly owned research center in China and it is also tying up with China FAW Group for the first time to make commercial vehicles, according to China Business News yesterday.

Analysts said the move may mark GM's more aggressive development in China but it was also taken as a sign that its relationship with SAIC, its sole Chinese partner, could be under strain after SAIC rolled out its self-branded models.

The new wholly owned engineering center would be the sixth of its kind globally, and GM will benefit from lower research and development costs, the Shanghai-based newspaper said, without elaboration.

The report also said a new venture would be formed with FAW Group, China's leading commercial vehicle maker, citing a supplier from the working panel.

"Along these lines a number of different options are being explored, but at this stage we are not ready to make any announcement," GM said in an e-mailed reply yesterday. Gao Yuan, a communications official from FAW Group, however, said he has not heard of that.

"GM is not competitive in the commercial vehicle segment worldwide," said an industrial analyst who used to work for GM. "A strategic alliance would help to speed up the development. But it is still hard to form one in a short period."

Regarding the R&D center, the analyst also said it could meet GM's ambition in China amid growing sales volume.

"But it is also a defensive move by GM regarding its Chinese partner as China's self-branded models are growing stronger," the analyst claimed.

SAIC, which has two ventures with GM, is now spending heavily on developing models under its own name plate. Its first model hit the market at the end of last year after it bought over designs from the former British Rover Corp in 2005.