GM Officially Out Of Control In China

Bertel Schmitt
by Bertel Schmitt
gm officially out of control in china

Everybody who’s ever worked in China knows that some things take some time. Nothing that is announced today, happens tomorrow. There are applications to be made, documents to be “chopped.” Sometimes, this process takes forever, as it seems to be the case with Hummer. Sometimes, things move a bit faster. Last December, we reported that GM would sell a crucial one percent of the 50:50 holdings of GM China to their joint venture partner SAIC to bring the shareholdings to 51 percent SAIC, 49 percent GM.

As China’s new year (that of the tiger) came around, China’s biggest automaker SAIC Motor Corp has won regulatory approval to acquire the crucial 1 percent stake in Shanghai GM, Shanghai Daily reports today via Gasgoo. The matter has been officially filed to the Shanghai Stock Exchange yesterday. It’s official now. General Motors officially has been relegated to minority shareholder in its key venture in the world’s largest auto market. SAIC is now calling the shots.

SAIC makes a charitable donation of $85m for the crucial 1 percent share. According to yesterday’s filing, the added 1 percent enables SAIC to consolidate the joint venture’s results into SAIC’s balance sheet. This makes the bargain price even more astonishing.

When the deal was announced in December, it also became public that SAIC had more or less given SAIC half of GM’s business in India. India is an important growth market. India had successfully kept China out of the country. The deal with GM gave SAIC, and by extension China, backdoor access to a strategically important market.

Again, the price of admission was very low for SAIC. GM basically sold half of their India business for anywhere between $300m to $530, by way of an investment vehicle still to be set up in Hong Kong, which will take over GM India. That money will go right back into the Indian operation, which hadn’t been doing so well.

For chump change, GM is giving up control of a very successful venture in the world’s largest auto market. For a contribution to keep the lights on in India, GM gives SAIC in China coveted access to a country they would not have been able to penetrate alone. While something of great value is practically given away, GM is asking tax payers in the U.S.A. and Europe for money to keep them afloat. Why aren’t they ask China for money for something China urgently needs and wants? What’s going on here?

Join the conversation
2 of 9 comments
  • Dukeisduke I saw a well-preserved Mark VII LSC on the road not too long ago, and I had to do a double-take. They still have a presence. Back when these were new, a cousin of mine owned an LSC with the BMW turbo diesel.
  • Dukeisduke I imagine that stud was added during the design process for something, and someone further along the process forgot to delete it after it became unnecessary.
  • Analoggrotto Knew about it all along but only now did the risk analysis tilt against leaving it there.
  • Mike Beranek Funny story about the '80 T-bird. My old man's Dart Sport had given up the ghost so he was car-shopping. He & I dropped my mom at a store and then went to the Ford dealer, where we test-drove the new T-Bird (with digital dash!)So we pull up to the store to pick mom up. She walks out and dad says "We just bought it.". Mom stares at the Mulroney- almost 13 grand- and just about fell over.Dad had not in fact bought the T-Bird, instead he got a Cordoba for only 9 grand.
  • EngineerfromBaja_1990 I'd love a well preserved Mark VII LSC with the HO 5.0 for a weekend cruiser. Its design aged better than both the VI and VIII. Although I'd gladly take the latter as well (quad cam V8 and wrap around interior FTW)