GM In Talks With SAIC To Sell JV Stake For Cash
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GM approached SAIC in recent weeks with an offer to sell some of its stake in their 50-50 joint venture Shanghai General Motors Co., Ltd. (Shanghai GM) that builds and sells Buick, Cadillac and Chevrolet models in China, according to the sources who declined to be identified as they were not authorized to reveal the preliminary talks.
The discussions between GM and SAIC come along with a push by GM to secure deep concessions from its bondholders and major union to show it can be made viable under the terms of a $13.4-billion U.S. government bailout. GM faces a deadline of next Tuesday to submit a new restructuring plan to the U.S. government detailing the progress it has made in cutting costs and shoring up its balance sheet.
The deal to sell its Chinese stake or assets would make GM a minority partner at its decade-old flagship venture in China, Shanghai GM, which is considered to be one of the remaining crown jewels in its global operations. An earlier new report said that GM is also seeking possible buyers of its Hummer brand in China.
Besides the two major joint ventures Shanghai GM and SAIC-GM-Wuling, GM and SAIC have other facilities and companies in China, including the Shenyang factory under construction (to make Buick GL8 and Buick First Land minivan), GMAC-SAIC Automotive Finance Co., Ltd., and Shanghai OnStar Telematics Co.
General Motors posted a 6% growth in its China vehicle sales in 2008, the lowest growth rate in at least six years, down from the 19% growth in 2007. Shanghai GM reports 8% drop in 2008 sales after it had topped the sales list of Chinese carmakers for three consecutive years from 2005 through 2007.
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