What’s good for GM is good for…China. The old saw needs amending following not just November when GM sold more cars in China than it did in its alleged home market but also since GM is to hand over majority control of its thriving Chinese car business to its partner Shanghai Automotive (SAIC) as the pair launch a new joint venture to crack the Indian market for small cars and micro commercial vehicles now dominated by the Japanese. The two already have a JV in South Korea.
While the switch in control of the Chinese JV, Shanghai GM, is being presented as an accounting move to let SAIC consolidate the JV’s earnings (it will buy a 1% stake in the jv for $85 million to give it a 51% stake), China’s carmakers seem to be picking Detroit apart piece by piece. Beijing Automotive Industry is considering bidding outright for GM’s Saab unit, now the Koenigsegg consortium bid, of which it was a part, has collapsed. Bank of China is reported to have set up a $3 billion line of credit for BAIC to finance a possible bid. GM’s Hummer division is being bought by Sichuan Tengzhong. Privately-owned Geely is reported to have lined up the financing for a bid for Ford’s Volvo car business.
The SAIC move is interesting because it is not just buying its way into foreign markets through acquiring distressed assets, but taking GM along with it to teach it the ropes. And nor does it have its eyes on the slow-growing developed markets but the rich promise of emerging ones.