Desperate GM Ready To Run From China
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 . . .
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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.