By on November 18, 2008

Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today. [A National Enquirer the paper is not. It is one of China's leading business newspapers, with a daily readership over three million.] The paper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?

A take-over of a large  overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble.

At current market valuations (GM is worth less than Mattel) the Chinese government can afford to buy GM with petty cash. Even a hundred billion $ would barely dent China’s more than $2t in currency reserves. For nobody in the world would buying GM and (while they are at it) Chrysler make more sense than for the Chinese. Overlap? What overlap? They would gain instant access to the world’s markets with accepted brands, and proven technology.

21st Century Business Herald, obviously with input from higher-up, writes that Chinese industry must change and upgrade. China wants their factories to change from low-value-added manufacturing to technically innovative and financially-sound high-value-add industries. Says the paper: “It would be much easier now for strong Chinese automakers to go global by acquiring some assets of their U.S. counterparts in times of crisis.”

Deloitte & Touche sees a trend: “Chinese automakers can start with buying out the OEM projects and Chinese ventures of some global carmakers such as GM and Chrysler.”

The Chinese appear to have bigger plans than an accounting firm can imagine. 21st Century Business Herald acts and writes as if its already a done deal, and the beginning of more to come. “In the coming two years China is likely to see a few of its large Chinese automakers and other manufacturing enterprises set a precedent for achieving globalization by acquiring global companies, just like SAIC or Dongfeng’s possible acquisition of troubled GM or Chrysler.”

Just in case you missed it, the Shanghai Automotive Industry Corporation (SAIC)  is China’s largest auto manufacturer. In 1984, the company entered a joint venture with Volkswagen. A decade later, SAIC entered a joint venture with General Motors. In 2007, SAIC bought the Nanjing Automobile Corporation, which had acquired  British MG Rover in 2005.

Dongfeng Motor Corporation is a public company, although 70 percent of their shares are reported to be in government hands. They also are one of China’s Big Three. The company has numerous joint venture partners, such as Nissan, Peugeot-Citroen, Honda, and Kia. Dongfeng (which means “East Wind”) was founded at the behest of Mao Zedong himself  in 1968.

Get the latest TTAC e-Newsletter!

95 Comments on “Chinese Automakers May Buy GM and Chrysler...”


  • avatar
    Ingvar

    Yeah, an update would be nice, as there’s absolutely no information as is.

  • avatar
    tom

    Should GM have to file for Chapter 7, it would make sense for SAIC (GM’s partner in China) to buy much of what’s left of GM.

    A C7 filing could be inevitable, because it would be hard for GM to operate under C11 with noone lending money…car production would come to a halt (no money for the suppliers) and hence C7.

    This could also be one reason why GM is so reluctant to even think about C11…

    Although I have to say that I haven’t heard anything of that sort, so unless there’s some concrete evidence, this has to be the wild ass rumor of the day…

  • avatar
    1996MEdition

    Is this a trick to increase page views? A teaser to keep us from flipping the channel? I thought TTAC was above this, post the news when you have it please.

  • avatar
    truthbetold37

    Why would you post this without details? This is equal to the local news saying “Five people die of ebola at local restaurant. News at 11.” and you are on your way out to eat.

  • avatar
    jckirlan11

    How about a naked woman instead of an unsupported headline to capture readers.

  • avatar
    Pch101

    Is this a trick to increase page views?

    No, it’s legitimate. I presume that he could use a little time to write about it. Give the guy a break…

  • avatar
    DweezilSFV

    Perhaps he’s waiting for a ship to shore from one of TTAC’s spy subs somewhere out in the Pacific. Morse code and all.

    I’m sure we’ll get the “late breaking” as it happens. This was just a head’s up. I would rather be aware of something happening than not, even if it’s only a headline.

    I’ll check the wireless for any news.

    This is really an OMG moment. Remember where you were when it was announced that…….????

  • avatar
    fiasco

    Real story added while making (now completely irrelevant) comment.

    Part of me shudders to think of GM becoming CM, part of me wonders if this is just a truly evil power play to bully Congress into bailout $$$.

  • avatar
    ScottGSO

    It’s probably a teaser put out by GM itself, trying to play to the nationalist “we don’t want the damn chinese to buy up america so we better support failing businesses indefinitely.” If you remember the idiocy when the port operations were going to be sold to Abu Dabai or however and all the politicians got to give indignant speeches. If some company wants to buy GM and has the money, let ‘em at it.

  • avatar

    Will they be buying “some assets” or entire companies?

  • avatar
    br549

    If some company wants to buy GM and has the money, let ‘em at it.

    Regardless of one’s political viewpoints, any American citizen must sadly acknowledge our downward trend towards 2nd rate economic status. We’re a debtor nation with waning political influence in the world. He who has the gold makes the rule. We’re out of the rulemaking business, and increasingly out of business altogether.

    It breaks my heart.

  • avatar
    forditude

    They should definitely buy Buick and make it a China-only brand.

  • avatar
    Rday

    If nationalism defeats the chinese attempts to buy GM and chyrsler, will china retaliate and stop buying our federal debt? Inquiring minds want to know. Which would be worse? GM becoming CM or americans having to compete with DC for available funds to finance this orgy of defecit spending?

  • avatar

    An “asset sale” can be nothing or all. Assets can be a hubcap stamping shop. Assets can be all plants, trademarks, patents etc. Usually, in this business, an “asset sale” is used to shield the buyer from long term liabilities – such as pensions or lawsuits. Check the history of airlines changing hands. It doubt though that SAIC could get away with screwing the pensioners as Delta did when they bought Pan Am …

  • avatar
    jet_silver

    br549, the ascendancy of finance that David Halberstam talked about in “The Reckoning” is over. The American car companies pretty much have to re-structure and their value – apart from their physical assets – without re-structuring is awfully low anyway. Technical people are getting out; you should see the number of Michigan plates in Silicon Valley these days. Unless the 2.8 do the radical work themselves (fat chance) it’s better that they are finished off this way than by bleeding to death.

    Under SAIC ownership I suspect the technical work force will rush for the exits anyway. Whatever is in development would be mostly useless if that happened, once again leaving physical plant the only asset we’re talking about.

  • avatar
    br549

    GM becoming CM or americans having to compete with DC for available funds to finance this orgy of defecit spending?

    We are indeed in the midst of an orgiastic defecit free-for-all, but what is the alternative? Sell our souls to a nation we don’t even trust? We’ve already sold them our debt. Let’s hold on to manufacturing. Talk about Faustian bargains!!

    The Rubin years proved that in better times, deficits can be eliminated, even when those deficits seem insurmountable. Economists know that in times of dire economic distress, deficit spending is a necessary evil. When the tsunami wanes, then we can get back to fiscal discipline.

  • avatar
    Matthew Danda

    Hey, the Belgians bought Budweiser. So this can happen, too.

  • avatar
    tom

    I went to the Chinese web site and let google do some translating…I still didn’t find all that much information though. I could have ended up with the wrong article, or the google translater might be bad at reading between the lines. Anyway, the only related things I found were these:

    [...]
    “The U.S. auto industry is in an extremely difficult, this is the Chinese capital ‘hunters’ time for the U.S. auto manufacturing industry.” China Association of Automobile Manufacturers, said the experts, “Changfeng Motors has announced that bid to participate in General Motor’s Hummer brand precedent. ”
    [...]
    Jin Jian pointed out that from the general M & A in China or joint venture began supporting industries. The general also do not want to bankruptcy, to sell some assets in exchange for liquidity of its reality into account. China’s equipment manufacturing enterprises the ability to view, part of the acquisition of assets from the beginning, M & A joint-venture factory in China is the realistic option.
    [...]

    So to me, it seems like they’re interested in Hummer, as well as in the Chinese joint-ventures with GM…

  • avatar
    John R

    Ostensibly, world domination is like a river. Given time a river turns into a canyon.

  • avatar

    Matthew Danda:
    Makes sense, both products are crap to begin with!

  • avatar
    Steven Lang

    Because one is a democracy and the other is a ruthless dictatorship that more or less spits on the responsibilities it has under the WTO.

    I’ve heard this rumor for months but the key word is ‘assets’. The Chinese government needs to find new and exciting ways to fund the effects of the one child policy and this may indeed be the way it gets done. GM may have assets both. Chrysler may actually be doable as a company. Although any sane entity would rather separate the wheat of assets from the chaff of debt.

    Other than Toyota (which has never willfully invested in an automaker outside it’s own country), and Nissan/Renault (who would prefer to wait for a C11 filing), I really don’t see any other suitor other than a government that could actually get a substantial Chrysler and/or GM deal done.

  • avatar
    truthbetold37

    I bet Rick Wagoner would make out like a bandit on this deal.

  • avatar
    hal

    “Because one is a democracy and the other is a ruthless dictatorship that more or less spits on the responsibilities it has under the WTO.”

    To be fair the US is second to none when it comes to flouting WTO rules and it’s treaty obligations generally.

    It’s hard to see value for a Chinese firm in buying GM or Chrysler. Sure you could pick them up for a song there is a reason for that.
    If you were a Chinese automaker entering the US market would you want to emulate the Japanese and build from the ground up or emulate Daimler?
    There are millions in tax breaks on offer for new autoplants in the South and building a chain of dealerships shouldn’t be hard either.

  • avatar

    Well, if they’d been allowed to, GM management would have moved all their manufacturing to China long ago, so why not have the Chinese pay for the brand?

  • avatar

    @Tom: You have the wrong article. Never ever trust Google to translate anything Chinese. Even humans have huge problems translating Chinese into English. I’m blessed with bilingual people in my office. A good excerpt can be found here: http://www.gasgoo.com/auto-news/1008425/SAIC-Dongfeng-said-to-buy-GM-Chrysler-assets.html

  • avatar
    br549

    If you were a Chinese automaker entering the US market would you want to emulate the Japanese and build from the ground up or emulate Daimler?

    The problem is, that although the Chinese have money, they have yet to prove themselves in the auto business. The learning curve is so steep, they probably feel they don’t have the luxury of time as a still-emerging industrial economy.

  • avatar

    Oh the irony the GM fans always spout the “where do the profits go” as an argument against those who prefer to purchase Hondas and Toyotas made right here in the USA by American workers. If China buys GM, will they still spout that line?

    Also as to ruthless dictatorship, I’d say more like a South American style dictatorship. In the old days when my parents fled China it was a true Stalinist Marxist state. It didn’t matter what you did. What mattered was who you were. If you were a landowner , educated , or religious that made you an enemy of the people and state.

    Now they are a traditional style dictatorship. Your actions are what count. You can make money, be religious do whatever you want except you can’t challenge the government in anything, kinda like the original Rollerball movie.

  • avatar

    @Sherman: Oh, you can even challenge the government a bit now (within limits …) see:

    http://www.bloomberg.com/apps/news?pid=20601109&sid=amFtFkI.V7nI&refer=home

  • avatar
    autonut

    It is fitting: blue Mao coveralls for all union workers. The mentality is already settled in.

  • avatar

    Several Chevy cars, including the Corvette, have a color called Victory Red, no? If the Chinese do buy GM, that color name would take on a whole new meaning…

  • avatar
    Steve_S

    Wow GM and Chrysler bought by Commies. That’s something you never thought could happen or be allowed to happen.

  • avatar
    volvo

    If this is a real proposal then I suspect the Brand Name, current engineering and existing tooling would be worth the price of admission to the Chinese. The physical plant, real estate and labor force probably would not be part of the deal.

    Rather than R&D clones of GM and Chrysler models popular in China it might be more efficient for the Chinese to pay a few billion USD to jump-start the process. If needed the tooling could be shipped from Detroit to China if it doesn’t already exist in sufficient quantity at GM locations in China. I am not sure that Chinese purchase of GM would need to be based on a large market for GM products in the US. At least early in the game the Chinese probably do not want to compete with already established Toyota, Honda, Nissan and Hyundai plants.

    It gives me no pleasure that with globalization American labor is competing against a increasingly competent, hungry, energetic workforce throughout Asia. Protectionism has it’s own set of problems.

    With either course the standard of living for blue collar and middle class workers in the USA will fall.

    I personally lean towards some degree of protectionism (but not a bail out) for US based manufacturing (and I consider Asian transplants to be US based manufacturers) since it already exists in government and the professions. Globalization as currently practiced is crippled by worldwide residual nationalism and ethnic concerns. IMO the US practices a purer form of globalization than any other economy and it creates an uneven playing field which is hurting us.

  • avatar
    Caffiend

    @ Rday,

    If China wanted to retaliate against a sale block, they have the Atomic bomb option of dumping the US currency they currently have. It would nuke the US economy, but that would seriously fuck with the world economy.

  • avatar

    Look guys, I’ve been in this business since 1973. I’ve seen it all. I recall stereotypes against Japanese. Haughty managers ridiculed them. Now Toyota is #1. Likewise Korea. China is a much bigger powerhouse. I’ve seen the sell-out of the whole British car industry. Nothing surprises me anymore in this business, nothing at all.

  • avatar
    JuniorMint

    If this is a ploy to garner more support for the bailout: it’s working! *chews nails*

  • avatar
    njoneer

    Hey US government! Are you getting this? Other countries, like China recognize the value of manufacturing and help their manufacturing businesses compete in the global market. Kind of like the opposite of the USA.

  • avatar
    br549

    JuniorMint :
    If this is a ploy to garner more support for the bailout: it’s working! *chews nails*

    I’ve already expressed my heartfelt opinion at the prospect, but another side of me says “bring it on.” Lob the proverbial ball into the Republican court and tell ole Shelby, Kyl, and the boys to pick their poison. If you don’t want a bailout, then here’s watcha got. No bluffs, just facts. Deal with it. You want a free-market global economy? Here’s what it looks like. See what the ‘Bama boys think of it.

  • avatar
    jimmcdosh

    LOL, there goes American built cars as we know them! Looks like I am goingto go out and buy me a classic 68 or 69 Camaro thats in great shape and stick with it for the rest of my life.

    jess
    http://www.privacy-center.ru.tc

  • avatar
    MrDot

    Awesome. “Bail us out or well sell-out to the reds.”

  • avatar
    Bunter1

    I guess this doesn’t look that big to me.
    GM has a market cap of 1.8bil-ish.
    They have sucked nearly that from the US economy every month for a decade. The rate has to be higher now.

    Point-GM is NOT AN ASSET FOR AMERICA!
    It is a LIABILITY.

    Let them have it.
    Their market share will negligible in no time.
    Zero leverage over our economy.

    Crank the price up to see how nutty they are!
    This could bring some bucks back.

    Random thoughts.

    Bunter

  • avatar

    If Rick Wagoner had to choose between either a bailout (or ch 11) with no job or a Chinese owned GM with him as a front man, what do you think he would choose?

  • avatar
    Bunter1

    Sherman Lin-clever thought

    Bunter

  • avatar
    shaker

    Wow – Bizzaro World…

    The “All American” company that once helped the Nazis could now be owned by the Red Chinese.

    I think I’ll just light a fatty and sit on the couch.

  • avatar
    Usta Bee

    According to the Gasgoo article they’re interested in GM and Chrysler both.

    I can picture it now, a remake of The Dukes Of Hazzard with a Chinese flag on the roof of the new “General Mao” !. :)

  • avatar
    DweezilSFV

    No more Road Runner but a Peking Duck, eh?

  • avatar
    dilbert

    If GM’s cars are a generation behind the competitions’ and the only buyers are the ones that are either bargain hunting (incentives) or people that buy because they want an American car. Then how will a Chinese company ever make money from buying GM?

  • avatar
    fiasco

    dilbert said:
    “If GM’s cars are a generation behind the competitions’ and the only buyers are the ones that are either bargain hunting (incentives) or people that buy because they want an American car. Then how will a Chinese company ever make money from buying GM?”

    You build the cars in plants with little environmental oversight and labor costs per day that GM has per quarter hour, that crapbox Cobalt that costs $16k would suddenly be $7,500 (OK, I made that up, but you get the point). The same mentality that gets people to buy junk at Wal Mart to save five bucks will take over the car business. “CM” will be the Hyundai of the 2010s, but watch out by 2020 when they get quality figured out.

  • avatar
    menno

    If this is true, the Chinese are no dummies. What they did for the remnants of British Leyland (i.e., MG-Rover) they would do here, too.

    SAIC (yes THAT company which has a 50/50 JV with GM and also one with VW) was trying to buy up MG-Rover, but strong MG-Rover along until the money ran out. THEN SAIC put in a bid, but being that the receiver of bankruptcy was not happy with the VERY obvious lack of good faith shown by SAIC, Nanjing Motors was awarded the bones of MG-Rover. The machinery, tools, dies, engine lines, rights (except the Rover name which was retained by Ford from a prior sell-off), designs and engineering drawings all where hoisted onto ships and went to CHINA. Nanjing paid pennies on the dollar for MG.

    SAIC had a license to manufacture “Rover” cars but no right to use the name, so they bastardized a car up and called it “Roewe” (which is ironically pronouced “wrongway” in English).

    So eventually, SAIC ended up buying Nanjing and now has all assembly lines, global rights to the MG name, everything – and have started exporting these cars.

    I see a similar story here for SAIC, which is a partner of GM at this time, in China and in South Korea (GMDaewoo). SAIC also separately has invested in Ssangyong of South Korea, which was a prior licensee of Daimler-Benz! So there has been a lot of incest going on…

    In any case, I can see SAIC waiting like a vulture, ready to swoop down and pick the bones of GM -OR- Chrysler. They won’t make the same mistake again and let a competitor get there ahead of them.

    If they end up with both, well, that’s their problem! (“American Motors – SAIC LLC, anyone”?)

    BTW, where did SAIC (appropriately named Shanghai Auto) learn this modus operandi? From GENERAL MOTORS which royally screwed over Daewoo by doing it to THEM in 2002 (or more to the point, their prior owners – the receivers and South Korean bankers).

  • avatar
    Airhen

    I would look forward to see how the Chinese deal with the UAW.

  • avatar
    Hippo

    LOL, the organized crime of the UAW against the Red Army, what a show.

    Tie the millstone around the neck of the Chinese instead of the American taxpayer. Brilliant.

  • avatar
    Point Given

    Woah. this has been reposted at the top of TTAC several times and now has over 8000 views. Where’s it all coming from?

  • avatar
    br549

    The story doesn’t seem to be gaining traction elsewhere. Drudge hasn’t posted anything yet, and neither has Autoblog.

  • avatar
    brownhound

    It’s on the front page of reddit right now – pretty sure that’s why it’s at 8000 views.

  • avatar
    tom

    It pays off to have a man in China…

  • avatar
    sonic_bang

    You think buying company like Chrysler would lead the Chinese to gain instant access to the world’s markets with accepted brands, and proven technology.
    What have you been smoking??
    Aside from Jeep, Chrysler co. don’t have any global brand. And what proven technology???
    Unlike GM, Chrysler is better off dead.

  • avatar
    gslippy

    If this is true, let ‘em. I still won’t buy a GM car.

  • avatar
    no_slushbox

    Downside: Our single biggest future military, economic and natural resource threat, with which we currently have huge exchange deficits, gains our largest industry.

    Upside: Incompetent, failed executives in China are executed or forced to commit suicide – Rick Waggoner will die!

    Final Analysis: The big three need chapter 11 to get rid of crushing debt and legacy costs and to get rid of unsupportable dealers and brands. After chapter 11 the US needs to step in, if necessary, to keep at least Ford and GM viable and domestic. China won’t get to “take care” of Rick, but hopefully he accidentally gets hit by a Hummer

  • avatar

    Purple haze all in my brain
    Lately things just don’t seem the same
    Actin’ funny, but I don’t know why
    ‘Scuse me while I kiss the sky

    Purple haze all in my eyes
    Don’t know if it’s day or night
    You got me blowin’, blowin’ my mind
    Is it tomorrow, or just the end of time?

  • avatar
    lawmonkey

    Wow – Edmunds linked to this and called it excellent coverage.

  • avatar
    jybt

    And I thought Chrysler’s quality couldn’t get any worse…Now the Chinese want to take it over?

  • avatar
    Demetri

    This sounds like the best option to me. Let China deal with GM and Chrysler. Leave Ford alone and maybe they can make it back to profitability.

  • avatar
    tom

    Wow – Edmunds linked to this and called it excellent coverage.

    Did you expect anything less?

  • avatar

    Guess what! The wave of the future Alpha social structures maybe mega companies. This is scary because mega companies, companies that are across the world can be beyond the laws of many nations.

    In other words, he who has the cash rules.

    It was time comsuming and difficult to get to the present regulatory level across this globe. Now with globalization, national regulation may be even more difficult. What prevents this companies the really large one from forming their own armies, etc. It seems to be happening.

    China buying GM is just the beginning. Watch out world here comes the Mega Companies whose main drive is the almight dollar.

  • avatar
    tom

    Watch out world here comes the Mega Companies whose main drive is the almight dollar.

    You mean almighty Yuan!

  • avatar
    carlos.negros

    Why don’t we sell them our prisoners? It costs too much to keep them here. And they can use them to work on the assembly line if they run out of their own prisoners.

  • avatar
    tom

    Why don’t we sell them our prisoners? It costs too much to keep them here. And they can use them to work on the assembly line if they run out of their own prisoners.

    A dictatorship never runs out of prisoners. But they could execute them, no questions asked. Also a cost effective way of dealing with things.

  • avatar
    Areitu

    At this point, I’m sure I could buy both of them with the change in my pants pocket.

    Caffiend :
    November 18th, 2008 at 11:33 am

    @ Rday,

    If China wanted to retaliate against a sale block, they have the Atomic bomb option of dumping the US currency they currently have. It would nuke the US economy, but that would seriously fuck with the world economy.

    They hold a lot of US treasury bonds, as do much of the other people they do business with. They also depend heavily on US consumers. I don’t think they’re in a position to do that without serious consequences.

  • avatar
    Usta Bee

    If this turns out the way everything else has it’ll mean that China will do away with GM’s dealers and you’ll be able to buy their cars at your local Walmart. They already have the service centers in place, they’ll just have to expand them a little. Pick up an Aveo and some resin patio furniture while you’re there.

  • avatar
    pf21

    Mr. Schmitt, did you buy some GM and Chrysler stocks recently? Let’s watch the stocks over the next couple of days.

  • avatar

    @pf21: Never touch the stuff. Matter of fact, my broker in NYC read the story, looked at the other screen and mumbled: “It’s not moving the stock.” Shenanigans like these are better left to brighter people. Like Porsche.

    23000 hits now.

  • avatar
    cjmarsh26

    In July 2006 Nissan wanted to merge with General Motors nearly three years ago,and since they refused to merge with the Japanese automaker because of a certain reason or another. But since their stock is worthless and I think they missed out of marrying beautiful Nissan and look at the shit they’re in now they are so deep in their own crap they are in the shit house.

    However, years ago Chrysler went in the verge into bankruptcy and later on Nissan almost went into bankruptcy not long ago. and the reason why that GM is nearly bankrupt because they own GMAC a finance division of GM in which means people that get loans, credit, etc.

    Since the housing bubble popped and more and more people are getting laid off from factories like GM and since gas prices have risen and have went down, and it make it hard to sell cars, trucks and suv’s especially if you are the American Automaker competing against the world and it’s economy struggling and suffocating in it’s own debt I think that they need to give them 36 billion dollars to the companys like the big three we need to support not just the company but the people that work there not there just for the benefits but it is a tradition, a American tradition.

  • avatar
    RogerB34

    Doubt the Chinese would touch Detroit auto companies until they go into bankruptcy. UAW contracts are an unacceptable financial risk to any buyer.

  • avatar
    Paul Niedermeyer

    Bertel, This posting is being used/linked by bail-out supporters to build support to save Detroit from the Huns.

    http://gm-volt.com/2008/11/18/is-china-considering-buying-gm/

  • avatar
    folkdancer

    I love these news stories/WARs. For one thing probably everybody with deep pockets IS considering buying the remnants of GM and Chrysler.

    Wired Magazine had an article about 6 months ago with a chart showing all the major car companies in the world. Less than 1/2 are profitable and only a very few earn more than savings bank interest. Good luck to the Chinese.

    Also,we (yes – you and I) have to think about what we have been doing.

    We didn’t adopt universal health care back in the 1950′s when other industrial countries did which would have removed this burden from our companies.

    We ran up terrible credit card debts, car loan debts, and mortgage debts.

    We didn’t adopt strong fuel economy standards.

    We didn’t raise taxes high enough on fuel.

    When we asked our car companies to make improvements they told us to go to hell and we didn’t force them to make enough improvements which would have been good for them and us.

    We need to buy 70% of our fuel from other countries because we drive around in obsolete ICE powered vehicles that use most of their fuel to make heat and noise.

    Now the Arabs are buying our banks and the Chinese may be buying our car companies. duh.

    If you feel a need to blame someone just look in the mirror.

  • avatar

    Market cap is 1,8 billion, and that’s generous, now that they are not moving any product.

    They’re asking for at least 10 billion for GM from Congress.

    The Chinese have done the math.

  • avatar

    @folkdancer: Wired Magazine had an article about 6 months ago with a chart showing all the major car companies in the world. Less than 1/2 are profitable and only a very few earn more than savings bank interest.

    You are right. I’ve always said that new cars are a loss leader for two very profitable businesses: Service and financing. GM botched even that with first selling half of a very profitable GMAC, and then letting them walk into the mortgage minefield. A captive financing arm is a license to print money.

  • avatar
    tzine

    I am not sure which is worse. Bailing out the automakers who were stuck between the government and big labor; or China buying them. If China does, who will make our tanks to roll them over when we get tired of their internet warfare? :)

  • avatar
    Anandakos

    Airhen,

    You posted “I would look forward to see how the Chinese deal with the UAW.”

    I’m afraid you don’t get it: read Menno’s post immediately above yours. The Chinese don’t give a tinker’s damn about the “going concern” named “General Motors” or that other one named “Chrysler LLC”. You are right that they don’t want to deal with a genuine union like the UAW instead of one of the “straw-man” club of informers they call a union. But they won’t have to. All they really want is 100 years of brand loyalty, engineering diagrams, computer software, test results, and THE ROBOTS!

    GM alone has invested upward of $4 billion in retooling the past five years. The robots those billions bought will be on a FAST boat to China within weeks after the “rescue”.

    I’m for Congress GIVING a gaggle of separate ESOP’s enough money to buy the Chevrolet and Saturn divisions (run by Saturn people, not Chevvy alums), the Buick-Pontiac division, and an amalgam of GMC and Cadillac from GM, with one for Jeep and the PT cruiser and one for the minivans from Chrysler. Let the meaningless Chrysler “me-too” sedans wither; they’re big Fiats.

    Demand that the taxpayers receive preferred stock paying dividends after five years or so and leave the corporate husks with the foreign operations. Congress would also have to top up the PBGC to ensure that the company pensions for former workers are worth something.

    Something to ease Ford’s burdens would need to be done, too, but it’s far enough along toward becoming an integrated global company that it makes sense to leave it alone.

    All this might cost $100 billion but it would result in a competitive industry with a range of products. If the worker/owners fail they then have no one to blame but themselves.

  • avatar

    Well Guess what! All this foreign investment means one thing! If we go down, the foreigners go down. Look at what is happening to the world economy.

    However, the point that the mega companies are the future. They will be the new social order. However lets hope they have learned from the mistakes of the nations. In other words, be kind to the common man. Remember, God must love the common man because he made so many of them.

  • avatar

    So GM is partners with a Chinese firm. Beware, the mega-firms are coming!

    They do not need bombs either. Why because the mega firms of the future control the economy of the future. That’s where the power is at.

  • avatar
    Tglwd

    “It breaks my heart”

    - Sorry, but welcome to the real world. Now you know how the rest of the world feels about the decisions your country makes. A lot of you Americans have always thought you have ruled the world with an iron fist, but not the case anymore, maybe really never were. Live in the 21st century, and help the world become a global community.

  • avatar
    PeteMoran

    @ Bertel

    I don’t get it, why would the Chinese take anything more than a foothold via just Volvo or at a stretch, just Chrysler? But GM? How would you unravel the basket-case that is GM?

    If true, the politics of all this will be extraordinary.

  • avatar

    Will I be able to buy a Buick at Walmart?

    Aside from abject nationalism, is there any compelling reason to not let the Chinese buy GM/Chrysler? The USA needs to lower it’s own debt so we do not have to rely on foreign investors buying our t-bills. If we can save tax dollars by not having to bailout both GM and Chrysler, doesn’t this put us on a path toward a more solvent USA?

    We used to worry about the Japanese taking over car-making and the world. Did they? No. That Japanese bubble also burst, with a decade long recession after. And Toyota is not quite the rainmaker it used to be. Larger, sure. More profitable? No. Japan faces strong competition from China and Korea when it comes to the global automobile marketplace. Did anyone predict that this would be the case in the days of predicting Japan would own everything? Not that I’m aware of.

    Remember when the rumors were going around about India wanting a (large) piece of Detroit? We didn’t seem as disgusted at that idea. But with Chinese ownership of GM/Chrysler we are about to vomit. Why? Is it communism?? China may not have free elections, but they espouse capitalism and free trade better than most countries. The thing about a communist dictatorship is that things can get done fast. Decisions can be made and implemented very quickly. Here in our democracy, government decisions come slow and take forever to implement. Committees, lobbies, parties, PACs, lawsuits, regulators, and the like that we have here in the USA keep the pace of government change slow as every side of the debate must be heard and considered. Not that I think communism trumps democracy. Carefully considered decisions are usually the wisest. It’s our partisanship for the sake of partisanship politics that gets to me. We can’t even fix up New Orleans or the World Trade Center in a timely fashion. If the The Shanghai World Financial Center was knocked down by Taiwanese terrorists, I’m sure the PRC would have a new one up right quick.

    The USA has been moving away from manufacturing for a very long time as it faces global manufacturing competition. It was inevitable that this trend would extend to car making. Frankly, I’m not sure Americans want to make anything anymore. Sure companies do, but American workers do not seem to want to work on assembly lines any more. Are you willing to drill holes in sheet metal all day long? Only if you get a big salary and pension a la the UAW, right? Let’s face it, America’s youth is way past lusting over a factory jobs; they all want to work for the next Google. As well they should. We are the most advanced country and society in the world, why the hell should we be doing the grunt work? If we ever lose our taste for innovation and entrepreneurship then we will have serious problems.

    We Americans, like our companies, need to get in shape. We need to be more efficient and do things smarter. There was a day when a high-school education (or less) was enough to get you a good manufacturing job that was a ticket to the middle class. Those days are long gone in America, and in perhaps the world. A college education is mandatory it obtain any sort of good paying job in the USA. It’s been that way for a while and is not going to change. Unskilled labor cannot provide middle class comforts. Even the immigrants in the USA from Mexico and Central and South America know this.

    So I say letting China or Chinese companies own GM and/or Chrysler is something to seriously consider. Patriotism and nationalism should not cloud our judgment here. “Who’s gonna make our planes and tanks if there’s another war,” you ask? General Dynamics, not General Motors. Do you think GM can really roll out an M1A1 tank? GM can’t even make a car as good as an Accord, they ain’t gonna be making F-22′s anytime soon. Lockheed Martin/Boeing has us covered there.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India