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Auto Industry

Carmaker Opel pulls out of China, to build Buicks for parent GM

German carmaker Opel will completely withdraw from China, saying it would be too expensive to build a strong presence there. Opel will instead assemble a new model and a Buick for parent company General Motors.

As of January 2015, sales of Opel cars in China will cease as part of a change of export strategy, the German subsidiary of US auto giant General Motors (GM) announced Friday, following a supervisory board meeting.

Describing the step as long-overdue, Opel Chief Executive Karl-Thomas Neumann said in a statement it would have cost hundreds of millions of euros to raise awareness of the brand in China and to expand its distribution network.

Last year, 22 Opel dealers in the China sold a total of 4,365 cars, the company said. This compared unfavorably with GM's other mass-market carmaker Buick, which had sales of 810,000 vehicles from 650 dealers.

The decision forms part of a strategy to intertwine the product ranges of Opel and Buick in an effort to share development costs. While Opel will be focusing sales in Europe, Buick is aiming primarily for markets in the United States and China.

GM CEO pledges to keep Opel on the road

Opel also announced that it would invest 245 million euros ($337 million) in its main plant in Rüsselsheim to build a new model at the factory. Moreover, the plant had been chosen to assemble a future variant of Opel's Insignia model which would be sold in the US under the Buick brand name, the carmaker said.

"With the investment in a new, additional model for Rüsselsheim, we will take another important step in our multi-billion dollar model offensive with which we will pave the way for Opel's profitable growth," GM President Dan Ammann said in a statement.

GM is seeking to return to profitability at its loss-making European units Opel and Vauxhall by 2016. Part of the drive is the closure at the end of 2014 of an Opel factory in Bochum, Germany, with around 3,000 auto workers to lose their jobs.

uhe/ph (Reuters, dpa, AP)

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