GM India is now under Chinese control!

GM’s China partner can drive the fortunes of GM India. The ramifications can be huge for the auto sector—and the country—at large

General Motors, GM, is slated to give up a crucial 1% stake of its China passenger-car venture to its partner SAIC, the state-owned Chinese automaker. Simultaneously, the two companies have launched a 50-50 joint venture based in Hong Kong for Asia Pacific region. So how does the new joint venture with China’s SAIC impact the position of General Motors in India? As usual, behind the complicated manoeuvring lies a simple truth—General Motors India (GMIL) will now be—plain and simple —under Chinese control. The new venture will take over GM's India assets and be able to sell small cars and light trucks in the world’s fastest growing car market after China. It is clearly apparent to anybody who understands the dynamics of the Chinese automobile industry that SAIC have used their considerable clout to twist General Motors USA (GM) into accepting a position that leverages the tenuous and shaky position GM has in China into letting the Chinese dominate in India.

China is now the world’s largest automobile market, and the way joint ventures are structured in China, GM would be extremely reluctant to put their JV with SAIC in China at risk. Better to let SAIC have a share of the GMIL pie, and in the bargain pick up some cash to try and repay the US government. So this is how it looks to us in India:

General Motors India is no longer under General Motors Asia-Pacific (DAT), Australia. Instead, it will now be part of a 50/50 joint venture between SAIC and GM. And SAIC shall call the shots, since SAIC has a majority shareholding here. This is in no way to be compared to the IBM-Lenovo deal. This is an outright entry by a Chinese automobile manufacturer into India.

In a slightly related move, GM has bought out Suzuki from a 50/50 JV in Canada. This will have an impact on Maruti Suzuki India Ltd—which is not very clear as yet.

Indian automobiles are rapidly acquiring a reputation for quality in neighbouring countries, while Chinese vehicles are, to put it gently, much cheaper, but not quite there yet. The introduction of extremely low cost Chinese vehicles into the Indian domestic market will probably spin off dynamics which can not be predicted, and GMIL will have to protect the carefully nurtured image that it has with great difficulty managed to build over the last few years.

GMIL was just about beginning to hit the market-share numbers in India. And now comes this news of them becoming a Chinese joint-venture under Chinese control. GMIL will need to be extremely careful about how they go forward here. Otherwise the whole house of cards could collapse, given the sad reputation some Chinese goods have acquired in India.

The Indian government is also sure to have a view on this development. Chinese trucks from India facing up with Chinese trucks from China on a disputed road in Kashmir is just one part of it. Wait and watch. And anticipate a Chinese-driven price war in the automobile market very soon.

General Motors seems to be racing ahead with new vehicle launches in India under the Chevrolet brand. A few months ago it was the diesel-engined Cruze taking the Honda Civic and Toyota Corolla head on. Then it was the turn of the electric Spark. Last week the motoring media was treated to a preview of their small hatchback, the 1.2-litre petrol engine Beat. With the Tavera a runaway success in the people mover category, and a decent 4WD in the Captiva, the reasonably successful Optra, GM's portfolio now needed an ultra-luxury car and some more commercial vehicles in the small- to medium-size ranges. Unconfirmed rumours about the Cadillac coming to India usually sink without a trace. Massive changes in the structure of the Board at General Motors in the US don’t really make headlines in India either. GM’s IOU to the US government now exceeds $52 billion, and the burn rate is not slowing down. All these were the key issues about GM in India. All that pales in comparison with the latest development of the JV with China.


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    Myron D. Stokes, Publisher eMOTION!

    1 decade ago

    Colleagues: In concurrence with the MoneyLifte analysis, eMOTION!, ( an automotive/aerospace industries research and analysis site founded in 2001 targeting professionals within the academic, media, corporate and government sectors, has recently released “2009/2010 Auto Industry Analysis: GM’s Transition to China” that takes dead aim at the primary culprit in the near destruction of the US industrial base and financial sector meltdown: China.

    In driving the point home, several key statements, based on observable, quantifiable data are made:

    1. General Motors Company is now under the de facto control of the China auto sector.

    2. The bankruptcy and rush to sell-off core GM assets inclusive of Opel, Saab, Saturn, Pontiac, Hummer and GMAC, was all part of a well orchestrated strategy launched over two decades ago by Beijing to capture the US auto industry, even as Japan, South Korea and Europe, in a notably less destructive way, had initiated their own.

    3. The implementation of this strategy was aided and abetted by shortsighted and irresponsible individuals within industry, government and academia.

    4. Recommends that Saab and Volvo are immediately nationalized to prevent total capture by the China auto sector, which in several instances has been represented by front companies.

    5. Commends those European countries, inclusive of Belgium, Spain, UK and the Flemish government, who worked together to prevent the selloff of Opel; a circumstance representing profoundly negative economic implications had it been accomplished as originally intended.

    6. Reveals, based on still classified data and imagery within US State Department and Department of Defense (DoD) archives, that Mao Zhedong, in a move echoing that of Josef Stalin, ordered the extermination of old and infirm Chinese he deemed unable to work in the aftermath of his defeat of the nationalist forces of Generalissimo Chaing Kai-Shek in 1949. The number of those killed in the days and weeks transpiring subsequent to order issuance, at least 70 million and as high as 120 million, exceeds by several orders of magnitude the known estimates in the 1949-1976 timeframe which included “The Great Leap Forward As such, history is changed: This is the worst atrocity ever perpetuated on humanity by humans, and the government responsible still exists in ideologically the exact same form.

    7. That China, through continuous and exponentially intensified espionage activities over decades, has succeeded in stealing core industrial and defense technologies inclusive of Lockheed-Martin/Boeing F-22 Raptor, Lockheed-Martin F-35 Lightning II, Boeing C-17 Globemaster III and the whole of the Aegis Ballistic Missile Defense (BMD) system.
    Full release for this analysis can be accessed through the following link:

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