SAIC sheds most of its share in GM India JV
Updated: 2012-10-29 11:12
By Han Tianyang (China Daily)
Shanghai-based SAIC Motor Corp recently decreased its stake in an equal partnership with General Motors in India to only 7 percent after the venture failed to be profitable for three consecutive years.
A listed company on the Shanghai Stock Exchange, SAIC made the move after deciding it is unlikely the partnership will show a profit in the near term and because the cars made are not under its own brand, according to a domestic media report that cited a senior executive of the company.
The New Sail developed at Shanghai GM is among the models assembled in India. [Chu Yang / Xinhua]
GM has long been assembling cars in India and in 2009 announced its India operation would become a 50-50 joint venture with SAIC, its main partner in China.
According to the plan, economy cars from Shanghai GM and minivans from SAIC-GM-Wuling, SAIC and GM's manufacturing joint ventures in China would be produced and sold in India under GM's brands.
Both SAIC and GM underscored that their collaboration on product strategy for the India market will not change after the recent change in shareholding.
"SAIC remains a key partner for GM in its emerging market expansion plans," GM said in a statement.
The company started assembling a Wuling minivan under the name Chevrolet Move in July in Egypt, where it has been exporting the New Sail made at joint venture Shanghai GM since 2010.
After buying back SAIC's share, GM will have a 93 percent stake in the operation and "is confident in India based on the long-term growth prospects in the market".
Passenger vehicle sales in India totaled about 1.95 million units last year in a market dominated Japan's Suzuki Motor Corp with its expertise in small cars.
Recovering from the shadow of bankruptcy in 2009, GM also plans to increase its stake to over 90 percent in its South Korean operation, according to a Reuters report.