GM to transfer stake to SAIC
General Motors (GM), the world's biggest auto maker, on February 26 signed a memorandum of understanding (MOU) with Chinese partners to restructure its ailing joint venture in Shenyang, capital of Northeast China's Liaoning Province.
According to the MOU signed in Shenyang, GM will transfer half of its existing 50-per cent stake in the joint venture, Jinbei GM, to its other joint venture partner Shanghai Automotive Industry Corp (SAIC), GM and SAIC said in a joint statement.
Jinbei GM's Chinese shareholders, led by Jinbei Automobile, a van maker based in Shenyang, will transfer all of their 50 per cent stake to GM's joint venture with SAIC and Shanghai GM.
Currently, Shanghai-listed Jinbei Automobile controls a 25 per cent share in Jinbei GM, Liaoning Fazhan Group has 10 per cent, Liaoning Energy General Company has 7.5 per cent and Shenyang Municipal Automotive Industry Asset Management Co has 7.5 per cent.
No further financial details for the restructuring were released.
Jinbei GM was established in 1998 with a total investment of US$230 million and started producing GM's Chevrolet Blazer sport utility vehicles and pickups at the end of 2000.
The joint venture has been suffering sluggish sales and heavy losses mainly because of its poor management and less competitive products.
The restructuring plan comes after GM, SAIC and Shanghai GM paid 900 million yuan (US$108 million) to acquire a 25, 25 and 50 per cent stake, respectively, in a car plant in East China's Shandong Province at the end of 2002.
The car plant was previously owned by the Shandong provincial government and produced vehicles for former South Korean auto maker Daewoo Motor.
Jinbei GM will be Shanghai GM's third vehicle plant after the restructuring, the statement said.
A management team headed by representatives from Shanghai GM will oversee Jinbei GM's daily operations to ensure a smooth transition, it said.
Shanghai GM, in which both GM and SAIC control a 50 per cent stake, now produces the Buick Regal luxury sedan, Buick Excelle sedan and Buick GL8 commercial wagon at a plant in Shanghai.
It makes the Buick Sail compact car at the plant in Shandong.
Shanghai GM is now the third-largest passenger vehicle manufacturer in China in terms of annual unit sales after German Volkswagen's two joint ventures in Shanghai and Northeast China's Jilin Province.
Last year, Shanghai GM's total sales surged by 81.6 per cent to 201,000 vehicles, accounting for 9.8 per cent of the domestic passenger vehicle market.
The joint venture aims to sell 285,000 vehicles this year and to control 20 per cent of the market over the next five to six years.