By on December 28, 2009

Toe tag sales. Picture courtesy plumparty.com

When news came out that GM would sell a critical 1 percent of their Chinese joint venture to SAIC (now owner of a 51 percent majority,) and that GM would sell half of their Indian operation to SAIC, rumors swirled that GM would sell-out their future in the world’s only remaining growth markets to raise cash for Opel. It doesn’t seem that way. GM is mortgaging their future at the pawn shop for pocket change. A whacko report even claims that GM is already under Chinese control …

First, the critical controlling 1 percent in the Chinese joint venture was practically given away for $85m.

Now it has been confirmed that half of GM’s India operation is changing hands for a mere $500m. This amount has been confirmed by GM officials to India’s Business Standard.

GM is getting less than book value. GM officials told journalists in India that the company had invested $1b in India since beginning operations in 1994. “The $1 billion includes setting up the Talegaon vehicle and power train facilities, Halol car plant, the Gurgaon office and a small portion towards setting up the research and development facility (GM Technical Centre) in Bangalore. About half this amount has been sold to SAIC,” said P. Balendran, director & vice-president of corporate affairs. The R&D centre will continue to remain a 100 per cent subsidiary of GM, USA.

For half of GM’s investment, SAIC is getting something of great value. Access to the Indian market which had been closed to Chinese companies.

The money most likely will flow right back into India. SAIC and GM-US formed a 50:50 joint venture investment company called General Motors SAIC Investment Ltd (GMSIL), based in Hong Kong. The new company was capitalized with $100m, and will invest $650m to update the joint venture’s plants in India.

As part of the $650 million expansion, GM and SAIC will launch small cars and utility vehicles in India, starting in the second half of 2011.

GM’s moves are getting curiouser and curiouser. In Europe, they are hanging on to a money losing Opel they cannot afford, and they are sending it to its certain death by ordering Opel to focus on Europe, a market saturated with cars and production capacity. At the same time, GM is giving up control in the world’s biggest and fastest growing market, and is selling half of its share in the world’s second fastest-growing auto market.

There is a whacko report out there that claims that GM is already under the de facto control of China, and that GM’s bankruptcy “was all part of a well orchestrated strategy launched over two decades ago by Beijing to capture the US auto industry.” Watching GM’s recent moves, we could begin to be convinced that the report has at least some merit. Until we come to the final piece of the report where they urge GM to stop “casting around for a Chinese to lead the company” and where they recommend putting Bob Lutz in charge of GM. Is there a doctor in the house? A bunch of burly medics? Restraints?

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13 Comments on “GM’s Sell-Out To China Continues...”


  • avatar
    lw

    Well GM is 61% owned by the USA, but….  their profits come from China… and since the Chinese control their economy, they control GM’s fate.

    China could be telling GM to agree to their terms or face stiff taxes on Chinese production…   They may want to remove GM from the Chinese market to make room for SAAB and others.  Keep the money in family.

    GM’s position seems to weaken on a daily basis.

  • avatar
    mpresley

    GM’s moves are getting curiouser and curiouser. In Europe, they are hanging on to a money losing Opel they cannot afford, and they are sending it to its certain death by ordering Opel to focus on Europe, a market saturated with cars and production capacity. At the same time, GM is giving up control in the world’s biggest and fastest growing market, and is selling half of its share in the world’s second fastest-growing auto market.
     
    I’m glad the American taxpayer subsidized this grotesque monstrosity, instead of letting it die as nature intended.  Oh well, the sooner the US economy completely implodes the sooner we can make something better of what remains, maybe.  On the other hand, the good new is that the Chinese mostly like Americans, so we’ve got that going for us.  Especially the women…but that could change real quick, I’m thinking, when the dollar becomes worthless.

  • avatar

    Especially the women…but that could change real quick, I’m thinking, when the dollar becomes worthless.
    It already happened. The Euro has replaced the USD as the favorite alternate currency in THAT trade. No wonder, a dollar buys 6.83 Yuan, whereas a Euro yields around 10 Yuan ….

  • avatar
    MikeInCanada

    I’m going to go out on a limb here and say Perhaps, in the long run, GM is right….

    Perhaps GM foresees all this success (in China) is going to result in some type of eventual takeover by their local partners. GM could be making a calculated bet that there is in fact no long term future for them in China as a OEM.

    Granted, Opel is a money loser, however it’s engineering is needed for models that go far beyond Europe.  Factor this in and perhaps it’s enough to keep them around.  China on the other hand is pretty much on its own as far as development goes.

    • 0 avatar
      geozinger

      @MikeInCanada – don’t go injecting forward thinking into this discussion. ;)
       
      Without more evidence one way or the other, or an announcement from any of the parties, we’re looking at a lot of conjecture.

  • avatar
    manny

    Gee I don’t know but that whacko report floating out there seems pretty spot on.

  • avatar
    manny

    Check out this link, it’s CNN’s Money on-line with an interesting article that dovetails to the above:
    http://money.cnn.com/2009/11/23/news/companies/gm_china/index.htm

  • avatar
    newfdawg

    The report that China may end up owning GM don’t strike me as far fetched.  GM now sells more cars in China than in the United States.  I recall reading an article in our local newspaper several years ago(damn!…I wish I’d kept that article!) that quoted a GM executive as stating that China could quite possibly become the dominant market for GM and the domestic market as very much secondary.  It wouldn’t suprise me terribly to eventually see GM move their corporate headquarters to China.

  • avatar
    manny

    I don’t know guys there’s something not right a about a Chinese Vette (haha.)  In my opinion GM stopped being an “American” company a long time ago, just like GE.  To me it’s nothing more than an international conglomerate with allegiance to no one.  So be it,  if the Chinese want it that bad, let them knock themselves out, but they should be responsible for all the strings that come with the package (union pensions, etc., etc.)  I surely won’t miss them.

    • 0 avatar
      lw

      “So be it,  if the Chinese want it that bad, let them knock themselves out, but they should be responsible for all the strings that come with the package (union pensions, etc., etc.) ”
       
      No such luck.. They will buy certain bits when it’s cheaper than stealing / reverse engineering them and at some point kick GM to the curb.  If the Chinese want to sell/produce Corvettes next year, you can bet they have had 50 C6s in a Chinese reverse engineering center for the last couple years.
       
      They do what suits them, when it suits them since they are the big kid on the block.. Sort of the like how the USA did things in the post WWII era.  Sucks to be on the other end of the stick…

    • 0 avatar
      lw

      Guessing the Chinese will have fixed this, since the General is unable….
      “General Motors said Monday it is recalling 22,000 Chevrolet Corvettes over concerns that the roof may fly off the vehicle — after a 2006 recall didn’t fix the problem. ”
       
      http://detnews.com/article/20091228/AUTO01/912280401/GM-issues-recalls-for-Corvette–Equinox–GMC-Terrain

  • avatar

    Check out this link, it’s CNN’s Money on-line with an interesting article that dovetails to the above
    That article, and the “research” piece authored by the industry and union supported Center for Automotive Research, has already received the proper attention by TTAC.


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