SAIC wins GM venture stake
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SAIC Motor Corp, China's biggest auto maker has won approval from the Chinese stock regulator to acquire an additional 1 percent stake in its car venture with General Motors.
SAIC said it paid about US$85 million for the stake, which boosted its total share in Shanghai GM to 51 percent and enables it to consolidate the venture's accounts onto its balance sheet, according to a statement filed to the Shanghai Stock Exchange yesterday.
The deal would also give SAIC the right to have an additional seat on Shanghai GM's board. GM would also have an option to buy back the stake later.
Announced in December last year, the major asset restructuring is part of SAIC's deepened cooperation with financially troubled General Motors to jointly develop business internationally.
GM and SAIC also agreed to set up a US$650 million joint venture in Hong Kong, which will take over GM's India business. The venture will produce and sell small cars and minivans developed by Chinese companies Shanghai GM and SAIC-GM-Wuling in India, which is to start operation in the first quarter of this year.
China overtook the United States as the world's largest auto market last year.
The China Association of Automobile Manufactures expects China's vehicle sales to grow another 10 to 15 percent to 15 million units this year.
SAIC is aiming to boost vehicle sales to 3 million units this year including doubling sales for its own vehicles to 180,000 units.
Robust auto sales have persuaded international auto makers to continue their expansion in China. General Motors, the biggest international auto maker in China, produces models under the Cadillac, Buick and Chevrolet brands through Shanghai GM.
It is also seeking increasing its stake in the minivan venture SAIC-GM-Wuling to boost profits and strengthen small car business.
GM's Chinese sales soared 97 percent in January to a record high of 219,192 units, after selling 1.83 million vehicles in China last year, up 67 percent from 2008.
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