GM Officially Out Of Control In China

Bertel Schmitt
by Bertel Schmitt

Everybody who’s ever worked in China knows that some things take some time. Nothing that is announced today, happens tomorrow. There are applications to be made, documents to be “chopped.” Sometimes, this process takes forever, as it seems to be the case with Hummer. Sometimes, things move a bit faster. Last December, we reported that GM would sell a crucial one percent of the 50:50 holdings of GM China to their joint venture partner SAIC to bring the shareholdings to 51 percent SAIC, 49 percent GM.

As China’s new year (that of the tiger) came around, China’s biggest automaker SAIC Motor Corp has won regulatory approval to acquire the crucial 1 percent stake in Shanghai GM, Shanghai Daily reports today via Gasgoo. The matter has been officially filed to the Shanghai Stock Exchange yesterday. It’s official now. General Motors officially has been relegated to minority shareholder in its key venture in the world’s largest auto market. SAIC is now calling the shots.

SAIC makes a charitable donation of $85m for the crucial 1 percent share. According to yesterday’s filing, the added 1 percent enables SAIC to consolidate the joint venture’s results into SAIC’s balance sheet. This makes the bargain price even more astonishing.

When the deal was announced in December, it also became public that SAIC had more or less given SAIC half of GM’s business in India. India is an important growth market. India had successfully kept China out of the country. The deal with GM gave SAIC, and by extension China, backdoor access to a strategically important market.

Again, the price of admission was very low for SAIC. GM basically sold half of their India business for anywhere between $300m to $530, by way of an investment vehicle still to be set up in Hong Kong, which will take over GM India. That money will go right back into the Indian operation, which hadn’t been doing so well.

For chump change, GM is giving up control of a very successful venture in the world’s largest auto market. For a contribution to keep the lights on in India, GM gives SAIC in China coveted access to a country they would not have been able to penetrate alone. While something of great value is practically given away, GM is asking tax payers in the U.S.A. and Europe for money to keep them afloat. Why aren’t they ask China for money for something China urgently needs and wants? What’s going on here?

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments
Join the conversation
2 of 9 comments
  • Rochester "better than Vinfast" is a pretty low bar.
  • TheMrFreeze That new Ferrari looks nice but other than that, nothing.And VW having to put an air-cooled Beetle in its display to try and make the ID.Buzz look cool makes this classic VW owner sad 😢
  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
Next