China and the world are waiting for a press conference to be held at 5pm local time (0900 zulu,) for which GM is promising “some important GM news,” relating to SAIC, says Reuters. Nick Reilly will take time off from restructuring Opel, and will personally host the conference.
It is widely expected that GM will cede control of the 50:50 China joint venture by selling 1 percent to SAIC. They will also most likely announce that GM will transfer half of GM’s India operations to the Chinese company.
According to Gasgoo’s sources, SAIC will have “a controlling stake in GM’s flagship venture in its fastest-growing market. However, GM would retain equal voting rights in company decisions. SAIC could pay up to 20 percent of the joint venture value to take control, while GM would have the option of buying back the stake later at a premium.”
GM is now mortgaging its second-most important market, China. By the looks of it, China will soon buy more GM vehicles than the USA.
India is (rightly or wrongly) seen as the “next China” as far as growth markets go, and auto manufacturers are falling over themselves carving out a share of the pie. GM doesn’t have much of a share. India is owned by Suzuki. In August of this year, GM had abandoned plans to get 10 percent market share in India by 2010, because “the economic downturn has forced us to go for a change of plans. We are now re-scheduling the target till 2011.” In 2008, the Indian automobile industry ranked as the ninth largest in the world with an annual production of over 2.3 million units. With more than 1.15b people, India is the second most populous nation on the planet, behind China. By handing a large chunk of its (future) Indian business to China’s SAIC, GM is admitting defeat, or is minimizing its potential in one of the world’s few growth markets, or is admitting that they don’t have the money to develop that market, or all of the above.
What’s more, SAIC is flexing its muscles. It’s telling its weakened partner who’s really boss on this side of the globe.