GM's Chinese Joint Venture Partner Buying Into Struggling SUV Venture in China

BEIJING February 26, 2004; The AP reported that General Motors Corp. said Thursday its main Chinese partner is buying into its struggling sport utility vehicle venture in China while the U.S. automaker trims its stake.

The SUV venture has the capacity to produce 30,000 SUVs a year, but sold just 3,289 in 2003.

GM said it had signed an agreement to sell half of its 50 percent stake in Jinbei General Motors Automotive Co. to Shanghai Automotive Industry Corp., its main Chinese partner.

The other 50 percent of the venture held by four smaller shareholders would be taken over by Shanghai General Motors Co., the main GM joint venture in China.

GM didn't give a reason for the deal, but it could boost SUV sales by giving the venture access to Shanghai Automotive's sales network.

Jinbei GM makes Chevrolet Blazer SUVs for sale here.

Managers from Shanghai GM are to oversee day-to-day operations of the SUV venture, GM said. The Detroit-based automaker and Shanghai Automotive each own 50 percent of Shanghai GM.

The deal requires final government approval, but GM said it already had the support of authorities in Shenyang, the city in China's industrial northeast where Jinbei is based.

General Motors, the world's largest automaker, said it would develop new products for the venture, but gave no details.

Last year, GM's total vehicle sales in China rose 46.4 percent to 386,710. Most of those were by flagship Shanghai Automotive joint venture.

GM said that gave it a 9.5 percent share of China's market for cars, trucks, buses and vans, compared with 15 percent for leading rival Volkswagen of Germany.