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SAIC, Dongfeng to buy GM, Chrysler? Not comfirmed

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Shanghai, November 19, 2008: ( Auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, may buy some assets of the two crisis-plagued American automakers General Motors and Chrysler LLC, Zhang Xiangmu, director of China's Ministry of Industry and Information Technology - the state regulator of China's auto industry - told reporters recently. Gasgoo reporters asked some sources to confirm the news today.

"GM will not sell its joint ventures¡ªShanghai GM and Shanghai-GM-Wuling in China,¡° said Zhou Fangyu, former director of GM Business Development Department. Data showed that Shanghai GM posted a net profit of up to 3.8 billion yuan during Jan.-Sept this year, reflecting China is still a high-growing market for GM, so GM would not sell its joint ventures in China, he said.

Henry Wong, a Shanghai-based spokesman for the biggest US auto maker, told AFP in an interview on Nov.13 that GM is continuing its investment in China and actually the American automaker¡¯s operation has been very profitable in China. "We are not withdrawing or holding back any investment in China," he said.

A source from SAIC told reporters in a phone interview that he hasn¡¯t heard of SAIC¡¯s any plan to buy GM or Chrysler. It is impossible for SAIC to acquire assets of GM or Chrysler directly in the U.S. as the Chinese auto giant has suffered a big loss in acquiring foreign assets, the source said. However, he also noted that it may be possible for SAIC to buy some suppliers or joint ventures of GM in China.

Another SAIC source also denied hearing the news report. He was just back from a SAIC corporate meeting held on Nov.18, and said the meeting didn¡¯t touch this matter. ¡°It is unlikely for SAIC or Dongfeng Motor to buy any assets of GM and Chrysler in China or abroad, he commented.

As Chinese automakers have been badly affected by the global financial crisis, many automakers have lowered their 2008 sales targets and have begun to cut production and jobs. Auto giants like FAW, and Dongfeng can¡¯t fulfill their sales target this year. A take-over of a large overseas automaker would not fit Chinese automaker now. Besides, SAIC has bought a lot of loss-making foreign assets such as MG, and Ssangyong, both being great burdens for the Chinese automaker now, so it will not consider another take-over, he said.

A senior executive from a global famous Investment Inc said he knew the rumor, but he declined to comment. Many companies in China may leak out such rumors at this time, but whether it is true we should wait and see, he said.

The executive has dealt with many businesses for Chinese automakers to expand in overseas markets.

Analysts said SAIC and Dongfeng, both China¡¯s state-owned enterprises under close supervision of the government, may intentionally leak such news out to incur the media and industry attention to the potential of acquisition.

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