“It’s too early to say for sure whether GM will purchase the controlling stake in HKJV, and thereby regain full control of its India business. It is unlikely that SAIC will relinquish its grip on India, just because it suddenly can’t service the capital requirements of the HKJV. Possibly, more information will become available when GM files its Q3 paperwork, or possibly later.”
As it turns out, they did.
The HKJV we refer to above is what’s known widely as General Motors India. Originally a 50-50 JV between GM and SAIC, the HKJV was established in 2009. According to Reuters, the post-bankruptcy initiative saw GM contribute
“…two assembly plants, [an] engine plant and sales network in the Indian partnership, while SAIC contributed 23.5 billion rupees. At the time of the deal, GM said SAIC’s money would allow the venture to market more products in India, particularly small cars and ultra-cheap micro minivans and buses that GM makes with two Chinese partners.”
Our own Tyler Vandermeulen, in his investigation of GM’s finances, found this nugget in GM’s 10-Q filing.
‘We were informed of SAIC-HK’s intent to exercise its right to not participate in future capital injections in HKJV. If this occurs we plan to settle the promissory note in the three months ending September 30, 2012 and provide an additional equity investment of $125 million into HKJV. As a result SAIC-HK’s interest in HKJV would be diluted from 50% to 9%. We also anticipate that the shareholders agreement would be amended such that we obtain control of and consolidate HKJV.’
Such an event has now come to pass, and GM now holds a 93 percent stake in the operation, and the first fruit of the JV, the Chevrolet Sail, is expected to launch in November, followed by the Enjoy utility vehicle. The Enjoy is based on an SAIC vehicle badged as a Wuling in China. The terms of the SAIC-GM deal were not disclosed. Based on Vandermeulen’s assesment, the deal will presumably cost GM the $125 million cited above.