General Motors (GM), the world's largest automaker, will start selling its first made-in-China Cadillacs in early 2005 in a market it expects eventually to account for a fifth of global sales of the luxury brand.

The US giant, the second-largest player in the Chinese market after Germany's Volkswagen, is angling to re-launch the sedan as it accelerates a drive to grab market share from leader Volkswagen.

GM will officially begin selling the CTS version of its classic American automobile as an import starting mid-September at 518,000 yuan (US$62,590), the company said in a statement on Monday.

Both the locally made and imported models will retail for the same price -- about double that of a Cadillac CTS in the United States. It can cost 20 percent more to produce a vehicle in China due to inadequate logistics and higher import tariffs.

The Cadillac, a mainstay in a product slate that includes the Buick, virtually vanished from Chinese roads in the 1990s.

Today, it imports a tiny number of the sedans every year.

But by 2005, China will house the only facility outside of the United States to build the luxury brand.

A second Cadillac, the SRX sport utility vehicle, was expected to be launched in China before the end of the year, GM added.

The CTS and SRX will be made at GM's flagship Shanghai-based venture, a partnership with Shanghai Automotive Industry Corp, China's largest car maker.

GM has said it will initially rely on "semi-knocked-down kits" (SKDs), exporting cars mostly built in the United States to China where final assembly will take place.

It is uncertain how the Cadillac will be received by a Chinese market increasingly flush with luxury car options from BMW to the venerable made-in-China Audi of Volkswagen.

GM and its Chinese partners are investing US$3 billion in China over the next three years to raise annual capacity to 1.3 million units in a country it expects to be its No 2 market in 2004.

The U.S. company is fast closing the gap with Volkswagen.

GM says it commands about 10 percent of the Chinese auto market -- including all vehicles from cars to trucks -- versus Volkswagen's 12 to 13 percent, though the German company maintains it has a quarter of the sedan segment.

If sales growth and margins continue at present rates, China could produce about a quarter of GM's US$4 billion in profits forecast by analysts for this year.

Yet car sales are slowing.

Beijing has imposed a clampdown on credit -- including auto loans -- as it tries to cool pockets of the economy that could overheat on the back of alarmingly high investment levels.

Car sales in China rose just 1.6 percent in July from June to snap a three-month decline, official data showed last week. Analysts say the market could grow just 10 to 20 percent this year after almost doubling to some two million units in 2003.

Overseas automakers have unveiled plans to invest some US$13 billion to triple capacity to around six million cars a year by the end of the decade, prompting fears of a margin-sapping glut just down the road.

Last week, GM said it was shifting production of the Buick GL8 executive wagon to a formally moribund plant in northeastern China to help free up capacity in Shanghai, the country's richest and most cosmopolitan city.

(Xinhua News Agency August 16, 2004)