China to Buy GM, Reloaded

Bertel Schmitt
by Bertel Schmitt

It’s been year since we blogged Chinese press reports that China’s SAIC might buy GM. It turned out to be one of many Chinese rumors that followed. We became the target of hate mongering—some idiots even accused us of driving down GM’s and Chrysler’s stock price. Duh, buyout rumors usually drive prices up. At the time, the GM stock was worth at least a little money: the market cap of GM was less than Mattel. Months later, the stock was worthless. GM and Chrysler went bankrupt. Instead of the Chinese owning GM and Chrysler, the American taxpayer ended up holding the barf bag.

It took a year and six days to dawn on CNN Money that a Chinese-owned GM might not be such an outlandish idea after all. “A Chinese-owned GM, it could happen,” headlines CNN Money today.

“GM could one day be Chinese owned. A shocking concept for the ultimate all-American company, but one some auto industry experts say isn’t too far-fetched.”

To prove their point, CNN trots out the notorious David Cole, who they identify as the chairman of the Center for Automotive Research, “a Michigan think tank.” Cole reveals to an aghast audience: “I can tell you right now the Chinese are shopping heavily in the U.S. auto sector.”

Two items of note:

One, Cole must have been under a rock. Since I’ve been writing for TTAC, the Chinese have been shopping in the U.S. auto sector more eagerly than Euro-trash at Macy’s. However, as amply chronicled by TTAC, nothing has come out of it. The China card has been played in every transaction, from Opel to Volvo, and nothing, nada, mei shen mo has happened. Even the Tengzhong-Hummer deal is still up in the air. In the meantime, the Chinese are packing up and leaving Mexico.

Two, TTAC readers know better than CNN. That “Michigan think tank” is nothing else than an industry and union funded organization, with the sole intent to separate the tax payers from their hard-earned money and to funnel it into bailouts. David Cole has been unmasked again and again as a mouthpiece of the UAW and GM, his analysis has been characterized by the dearly departed Robert Farago as “wildly exaggerated predictions of plague, pestilence and famine.” Apparently, this went right over the heads of CNN.

According to CNN, “Cole said such a deal isn’t imminent and wouldn’t happen until GM starts selling shares to the public, likely a year or more from now. But he says buying GM would be a major opportunity for the nascent Chinese auto industry.”

Let’s set aside the notion that Fitch just said that GM won’t be ready to sell shares to the public anytime soon. In its current financial state, GM would be delisted even from the pink sheets.

What is Cole up to? Is he talking up a stock that may be listed or not, God knows when? Or is he simply using the Chinese boogiemen to shake loose some additional taxpayers’ money for the supporters of his Michigan think tank? Which appears to have the depth of a puddle.

To make the slant-eyed boogiemen even scarier, CNN found Kim Korth, president of the auto consultancy IRN. She’s one of the few who thinks that GM’s dismal results “deserve to be applauded.” As far as the Chinese buying GM goes, Corth fears “there would be a national outcry in that regard.”

We beg to differ. If anyone, Chinese or Martian, would buy GM at a price that gets the taxpayers’ money back, there would be a tickertape parade for the unlucky buyer.

Never mind. It’s not going to happen. Clueless Cole says “the Chinese have a lot of our money and they’re looking to invest it.” Wrong. The US has more than a trillion $ of China’s money, already invested in US government debt. China is worried about the falling dollar and the creditworthiness of its debtor. They don’t need shakier investments.

Be on the lookout for more of these announcements. And watch your wallets.

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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  • Bertel Schmitt Bertel Schmitt on Nov 24, 2009

    Glenn: Kim Korth, korrekt and korrekted. CNN spelled her with a C. They also call SAIC SIAC ...

  • Pf21 Pf21 on Nov 25, 2009

    How much is GM really worth? I heard Volvo had debts and obligations up to $4 billion in their book. So for the buyer of Volvo, the total price is actually as high as $6 billion. Regarding the Chinese manufacturers leaving Mexico, I think they might finally realize that China is Da auto market in the world for the next 20 years, not N.A., Japan or Europe. BTW, I do not think auto industry is really labor intensive. It is actually all about automation and artificial intelligence. Both quantity and quality ultimately depends on how good the robots are.

    • Wsn Wsn on Nov 25, 2009

      Very easy to find out the worth of GM. Step 1: Obama declare the sale of GM on Jan 1st of 2011 (give prospective buyer time to finance) Step 2: State the terms and conditions (i.e. how many UAW jobs to preserve) Step 3: Auction off to highest bidder. The transaction price is the worth of GM.

  • RHD The re-paint looks like it was done with a four-inch paintbrush. As far as VWs go, it's a rebadged Seat... which is still kind of a VW, made in Mexico from a Complete Knock-Down kit. 28 years in Mexico being driven like a flogged mule while wearing that ridiculous rear spoiler is a tough life, but it has actually survived... It's unique (to us), weird, funky (very funky), and certainly not worth over five grand plus the headaches of trying to get it across the border and registered at the local DMV.
  • Kat Laneaux I get the point that Musk is making. I wouldn't want everyone to know my secrets. If they did, they could or would shout it out to the world. But then, if Musk certified certain folks and had them sign Confidentiality agreements, which would allow them to work on cars that Musk had made, that could allow others to work on his cars and not confine vehicle owners to be charged an arm and a leg for the service. It's a catch 22. People are greedy little buggers. If they can find a way to make money, they will even if it wrong. People...sad.
  • 285exp I have been assured that EVs don’t require maintenance, so this seems pointless.
  • Slavuta "The fuel-economy numbers are solid, especially the 32 mpg on the highway"My v6 Highlander did 31 over 10 hour highway trip
  • Aja8888 As I type this, my 4 months old Equinox's Onstar module that controls the phone is broken. Yep, 4 months (never worked right from day one). Replacement will be a REFURBISHED unit since no new ones can be obtained (from China?). I really don't miss the phone via Bluetooth. And I have a great Garmin that I have used for years for trips which has free lifetime maps and traffic.