GM and Chinese partner take aim at booming India market

Shanghai/Detroit: General Motors and Chinese partner SAIC Motor Corp are to team up to make commercial vehicles in India, taking their successful Chinese partnership into one of the world's fastest growing auto markets.

GM will also sell majority control of its China car venture to SAIC in a series of deals that give GM a timely cash injection as it restructures after emerging from bankruptcy, and give China a back-door entry into India's booming market.

"India is a test case of SAIC's ambition for overseas expansion, and it may further expand into South East Asia when the time is right," said Johnny Wong, auto analyst at Yuanta.

The GM SAIC partnership is one of the most successful tie-ups between a foreign and local automaker in China, helping both companies in a fiercely competitive market where they vie with Volkswagen, Toyota Motor Corp and Ford Motor Co among others.

"It seems to me that SAIC's status in the tie-up is obviously rising," said Qin Xuwen, an analyst with Orient Securities. "The tide has started to turn. They are equal partners now."

GM India said its US parent would collaborate with SAIC to develop and make commercial vehicles and other products for India and for export.

Joint venture

That collaboration, which should be finalised soon, would give the Indian unit access to mini-commercial vehicles and other products from GM's joint venture in China, GM India said in a statement.

For years, Chinese automakers have been churning out foreign brands through local tie-ups with Volkswagen, Toyota and others or have focused their own production on basic and cheap models aimed only at the domestic market — now the world's biggest.

Snapping up assets from distressed auto giants offers them a short cut to global markets and helps them raise both their technical expertise and their profile.

The deals with SAIC come as GM has opted to retain and turn around its European Opel operations in a restructuring estimated to cost about 3.3 billion euros (Dh18.26 billion), reversing a decision to sell a controlling stake in the unit.

GM had a cash hoard of nearly $43 billion at end-September thanks to $50 billion of US government support that has made the US Treasury a 61 per cent owner, but the company has made it a priority to repay debt to US taxpayers quickly, possibly as early as June.

Last week, GM's CEO Fritz Henderson abruptly resigned after the company's board decided the automaker needed to push its restructuring faster under new leadership.

On Thursday, SAIC suspended trading in its shares on the Shanghai market pending an announcement on what it called a "major asset restructuring."

SAIC President Chen Hong has previously said the company was very interested in entering the Indian market and listed it as second in terms of potential after China.

There is very little Chinese presence in the Indian auto sector. There are a number of ventures between Chinese and Indian firms making electric two-wheelers, but these are tiny.

Bilateral trade between India and China has grown in recent years but New Delhi, worried about security risks, has taken steps to regulate the entry of Chinese investments and workers.

China's auto market has been a major bright spot this year amid a steeper-than-expected global industry downturn, thanks to Beijing's stimulus measures.

Suzuki and GM to stop Canada association

General Motors Co and Suzuki Motor Corp have agreed to end their automaking joint venture in Canada, leaving GM without a Japanese production partner after also severing manufacturing links with Toyota.

Suzuki said yesterday it will sell its 50 per cent stake in CAMI Automotive Inc to GM for an undisclosed price, giving the US automaker full control of the company.