GM Sells Its Future To China

Bertel Schmitt
by Bertel Schmitt

And so it happened. Xinhua (translation via Gasgoo) has put on the wire that General Mayhem will “transfer half of its Indian operations to SAIC Motor by setting up a 50-50 joint venture there with the Chinese partner.” As expected, “GM and SAIC have also reached an agreement to transfer 1 percent of GM’s stake in their 50-50 Shanghai car venture to SAIC.” With that little percent, SAIC has a controlling majority of the Chinese joint venture. What for?



In return, GM gets what Reuters calls “a timely cash injection.” As suspected by TTAC commentator Pete Moran, the money is most likely being used to fund Opel. GM China would have lost big if Opel would have gone to Magna and the Russians. Many Chinese Buicks are rebadged Opels (Regal/Insignia, Excelle/Astra.)

In India, GM needs help. And SAIC needs help. GM has production capacity of 225,000 units in India. GM sold 65,700 units last year. which works out to a suicidal capacity utilization in India of below 30 percent. SAIC in turn receives what they yearned for: Access to the Indian market. India is paranoid about China invading their country, be it with tanks or with low priced cars. India has so far done everything to keep the Chinese out. GM is giving SAIC a backdoor into India, and 50 percent of their share in the world’s second fastest-growing auto market.

Reuters quotes Qin Xuwen, an analyst with Orient Securities who said “it seems to me that SAIC’s status in the tie-up is obviously rising. The tide has started to turn. They are equal partners now.”

That is the understatement of the day. By giving up control in the world’s biggest and fastest growing market, and by selling half of their share in the world’s second fastest-growing auto market, GM is selling off its future for Chinese cash. They must need the money badly.


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

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  • Psarhjinian Psarhjinian on Dec 04, 2009

    No bondage imagery today? I was rather looking forward to it.

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    • Cammy Corrigan Cammy Corrigan on Dec 04, 2009

      2 days ago everyone was wondering when Bertel Schmitt was going to write another installment of his great Autobiography. Now everyone wants to know when the next twisted picture is going to be posted! That's rock and roll, baby! :O)

  • Tparkit Tparkit on Dec 04, 2009

    The 51% is the key here. GM is engaging in window dressing by ensuring they no longer need to consolidate the financials of their disastrous Indian venture. Also, it remains very possible Washington is bribing China to give billions to GM so that Washington can avoid paying the costly political price that would come from shoveling more taxpayer money into the Detroit inferno. If so, the quid pro quo will happen on the side... watch for it. That's how China will get its money back from this shell game. End result: GM gets money for its foreign operations from the US taxpayer, but gets deniability because it is laundered through China.

  • Dartdude The bottom line is that in the new America coming the elites don't want you and me to own cars. They are going to make building cars so expensive that the will only be for the very rich and connected. You will eat bugs and ride the bus and live in a 500sq-ft. apartment and like it. HUD wants to quit giving federal for any development for single family homes and don't be surprised that FHA aren't going to give loans for single family homes in the very near future.
  • Ravenuer The rear view of the Eldo coupe makes it look fat!
  • FreedMike This is before Cadillac styling went full scale nutty...and not particularly attractive, in my opinion.
  • JTiberius1701 Middle of April here in NE Ohio. And that can still be shaky. Also on my Fiesta ST, I use Michelin Pilot Sport A/S tires for the winter and Bridgestone Potenza for my summer tires. No issues at all.
  • TCowner We've had a 64.5 Mustang in the family for the past 40 years. It is all original, Rangoon Red coupe with 289 (one of the first instead of the 260), Rally Pac, 4-speed, factory air, every option. Always gets smiles and thumbs ups.
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