GM to Double Production in China image

GM plans to double production capacity in China and open 600 dealerships.

China’s auto sales dropped from 35% in 2010 to just 2% in the last quarter. Demand has been blunted by government credit and investment controls aimed at slowing an overheated economy.

“We fundamentally believe in the strength of the Chinese market,” Akerson said during the Beijing auto show.

GM plans to expand its dealership from 2,900 in 2011 to 3,500 by the end of 2012 and also to boost production capacity in China to 5 million units by 2016, nearly doubling the 2.55 million cars and trucks GM and its Chinese partners sold in China in 2011. Cadillac, the company’s luxury unit, plans to introduce one new model per year in China, raising its annual sales from 30,000 units last year to 100,000 units by 2016. GM already announced that this year will be the all-new XTS sedan, which will be produced in China.

In 2009 GM sold Shanghai Automotive Industries 1% of their venture before going through a restructuring in U.S. bankruptcy court, offering SAIC a controlling 51% stake and the right to record the venture’s revenues on its own books. GM says the latest deal calls for the two sides to create an operating unit that will be owned 50-50.