Desperate GM Ready To Run From China

Bertel Schmitt
by Bertel Schmitt

New twist in the SAIC buying GM saga (and fair warnings to TTAC’s admins to allocate extra bandwidth). We’ve said all along that SAIC had designs on GM’s assets. That they would just wait until the time—make that until the price—is right. Well, the time is right. GM has until Tuesday to submit a new restructuring plan to the U.S. government detailing its progress cutting costs, shoring up its balance sheet and figuring out a way Fordward [sic]. So the time has never been righter, and the price is most likely commensurate. With all other deals failing, GM is getting ready to sell their crown jewels: their China operation.

Despite constant denials, General Motors has held talks with China’s SAIC Motor Corp about selling part of its stake in their joint venture or other assets as the U.S. automaker, Reuters reports. GM needs the cash, STAT. According to Reuters, GM approached SAIC Motor in recent weeks with an offer to sell some of its stake in their 50-50 joint venture that builds and markets Buick, Cadillac and Chevrolet models in China. And why would they do that?

Such a deal would make GM a minority partner at its decade-old flagship venture in China. It also would seal GM’s hopes of any meaningful growth. Shanghai General Motors is considered to be one of the remaining money makers at GM, and the Chinese market has just started to grow. Experts expect China to buy 30m cars by 2025 or earlier. In China, GM and its joint ventures in China posted 6 percent sales growth in 2008.

Besides their passenger car tie-up, GM and SAIC have seven other joint ventures in China, including an automotive finance company modeled after GMAC and a version of GM’s OnStar navigation service for the Chinese market. Reuters: “In the early stages of the talks, GM signaled a willingness to consider selling other assets in China to SAIC, according to one of those with knowledge of the discussions.”

We’ve made some calls to people we know, and the consensus is that these are not the leaks previously sprung by investment bankers to raise interest in possible deals. “Sounds and feels like this is the real thing. Lots of meetings and closed doors,” says a source who’s hoping to keep his or her job after GM is out of control in Shanghai.

More news as it develops . . .

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=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Mtypex Mtypex on Feb 12, 2009

    People buy Chrysler and GM crap cars. They'll buy Chinese, from Wal-Mart. I might as well place the money on the table - it's a sure thing.

  • Asdfghjkl Asdfghjkl on Feb 13, 2009

    There are so many false stories about GM. I bet this is another one on them. I guess your down, the media loves to step on you.

  • Wjtinfwb Funny. When EV's were bursting onto the scene; Tesla's, Volt's, Leaf's pure EV was all the rage and Hybrids were derided because they still used a gas engine to make them, ahem; usable. Even Volt's were later derided when it was revealed that the Volt's gas engine was actually connected to the wheels, not just a generator. Now, Hybrids are warmly welcomed into the Electric fraternity by virtue of being "electrified". If a change in definition is what it takes, I'm all for it. Hybrid's make so much sense in most American's usage patterns and if needed you can drive one cross-country essentially non-stop. Glad to see Hybrid's getting the love.
  • 3-On-The-Tree We also had a 1973 IH Scout that we rebuilt the engine in and it had dual glass packs, real loud. I miss those days.
  • 3-On-The-Tree Jeff thanks. Back in 1990 we had a 1964 Dodge D100 with a slant six with a 3 on the tree. I taught myself how to drive a standard in that truck. It was my one of many journeys into Mopar land. Had a 1973 Plymouth duster with a slant six and a 1974 Dodge Dart Custom with 318 V8. Great cars and easy to work on.
  • Akear What is GM good at?You led Mary............................................What a disgrace!
  • Randy in rocklin I have a 87 bot new with 200k miles and 3 head gasket jobs and bot another 87 turbo 5 speed with 70k miles and new head gaskets. They cost around 4k to do these days.