GM Wins Approval to Build $1.3 Billion Cadillac Plant in China

May 07, 2013 10:55 AM EDT | Matt Mercuro

General Motors announced this week that it won regulatory approval to build a Cadillac factory to increase sales of luxury vehicles in China.

The plant would reportedly allow the company to avoid paying China's 25 percent import tariff according to a company press release.

The plant will cost approximately 8 billion yen, or $1.3 billion U.S. dollars, according to Reuters.

Chief Executive Officer Dan Akerson stated that the company is hoping to increase Cadillac sales in China, and feels eventually their luxury brand will be able to compete with BMW and Audi in the country.

"Our longer-term goal is to take Cadillac's share of the luxury car market to 10% by 2020," GM China president Bob Socia said in a press statement.

The National Development and Reform Commission recently signed off on the plant, and construction will begin in June according to GM spokeswoman Dayna Hart. The plant will be constructed in Shanghai and will have the annual production capacity of at least 150,000 vehicles.

The plant will be run by Shanghai GM, a joint venture with China's SAIC Motor Corp.

GM launched the Cadillac XTS sedan in China earlier this year and plants to introduce a new Cadillac vehicle every year through 2016. The company feels this strategy will help GM see a boost in annual Cadillac sales from 30,000 vehicles in 2012 to 100,000 vehicles sold by 2015 according to the company press release

"GM needs to build a relatively high-end brand in China in order to improve its overall product line," said Jia Xinguang, managing director of industry group the China Automobile Dealers Association in a press statement.

GM sold 2.84 million vehicles in China last year, a 11.3 percent increase according to GM.

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