GM's Sell-Out To China Continues

Bertel Schmitt
by Bertel Schmitt

When news came out that GM would sell a critical 1 percent of their Chinese joint venture to SAIC (now owner of a 51 percent majority,) and that GM would sell half of their Indian operation to SAIC, rumors swirled that GM would sell-out their future in the world’s only remaining growth markets to raise cash for Opel. It doesn’t seem that way. GM is mortgaging their future at the pawn shop for pocket change. A whacko report even claims that GM is already under Chinese control …

First, the critical controlling 1 percent in the Chinese joint venture was practically given away for $85m.

Now it has been confirmed that half of GM’s India operation is changing hands for a mere $500m. This amount has been confirmed by GM officials to India’s Business Standard.

GM is getting less than book value. GM officials told journalists in India that the company had invested $1b in India since beginning operations in 1994. “The $1 billion includes setting up the Talegaon vehicle and power train facilities, Halol car plant, the Gurgaon office and a small portion towards setting up the research and development facility (GM Technical Centre) in Bangalore. About half this amount has been sold to SAIC,” said P. Balendran, director & vice-president of corporate affairs. The R&D centre will continue to remain a 100 per cent subsidiary of GM, USA.

For half of GM’s investment, SAIC is getting something of great value. Access to the Indian market which had been closed to Chinese companies.

The money most likely will flow right back into India. SAIC and GM-US formed a 50:50 joint venture investment company called General Motors SAIC Investment Ltd (GMSIL), based in Hong Kong. The new company was capitalized with $100m, and will invest $650m to update the joint venture’s plants in India.

As part of the $650 million expansion, GM and SAIC will launch small cars and utility vehicles in India, starting in the second half of 2011.

GM’s moves are getting curiouser and curiouser. In Europe, they are hanging on to a money losing Opel they cannot afford, and they are sending it to its certain death by ordering Opel to focus on Europe, a market saturated with cars and production capacity. At the same time, GM is giving up control in the world’s biggest and fastest growing market, and is selling half of its share in the world’s second fastest-growing auto market.

There is a whacko report out there that claims that GM is already under the de facto control of China, and that GM’s bankruptcy “was all part of a well orchestrated strategy launched over two decades ago by Beijing to capture the US auto industry.” Watching GM’s recent moves, we could begin to be convinced that the report has at least some merit. Until we come to the final piece of the report where they urge GM to stop “casting around for a Chinese to lead the company” and where they recommend putting Bob Lutz in charge of GM. Is there a doctor in the house? A bunch of burly medics? Restraints?

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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4 of 13 comments
  • Manny Manny on Dec 28, 2009

    I don't know guys there's something not right a about a Chinese Vette (haha.) In my opinion GM stopped being an "American" company a long time ago, just like GE. To me it's nothing more than an international conglomerate with allegiance to no one. So be it, if the Chinese want it that bad, let them knock themselves out, but they should be responsible for all the strings that come with the package (union pensions, etc., etc.) I surely won't miss them.

    • See 1 previous
    • Lw Lw on Dec 28, 2009

      Guessing the Chinese will have fixed this, since the General is unable.... "General Motors said Monday it is recalling 22,000 Chevrolet Corvettes over concerns that the roof may fly off the vehicle -- after a 2006 recall didn't fix the problem. "

  • Bertel Schmitt Bertel Schmitt on Dec 29, 2009

    Check out this link, it’s CNN’s Money on-line with an interesting article that dovetails to the above

    That article, and the "research" piece authored by the industry and union supported Center for Automotive Research, has already received the proper attention by TTAC.

  • Lorenzo Are there any naturally aspirated engines available?
  • Jeff There was a time that all the major auto makers advertised there full size V-8 engine cars to be quieter than a Rolls Royce. Ford had ads up thru the early 80s showing the Ford LTD and the Mercury Grand Marquis being quieter than a Rolls Royce with a smoother ride. An ad for a the Grand Marquis showed how quiet and smooth riding it was demonstrating that even a rabbi could do a circumcision on a baby boy in the back of a Grand Marquis. Most cars in the 60s, 70s, and much of the 80s were marketed for their quiet interiors and smooth rides. Now we have to add noise to a vehicle to give the illusion of powerful and fast. If I ever were to own an EV I would want it quiet.
  • Lorenzo Six percent here, ten percent there, and pretty soon you've got a dead brand.
  • ToolGuy Tungsten trim? I am holding out for the Depleted Uranium trim.
  • Proud2BUnion Mr. Allen Wrench needs tungsten to live!