Team-BHP - GM increases its stake in Indian arm (GM India) to 93%

GM India which was a 50-50 JV between GM USA and SAIC China will now be under stewardship of GM USA.

Quote:

US car major General Motors Co has increased stake in its Indian operations to 93 per cent by buying 43 per cent from its Chinese partner Shanghai Automotive Industry Corporation Group for an undisclosed sum.

In December 2009, Shanghai Automotive Industry Corporation Group (SAIC) and General Motors Company had announced expansion of their cooperation in Asia and formed a 50-50 joint venture investment company.

As a result of it, SAIC took 50 per cent stake in General Motors India, which became an equal joint venture between the Chinese automaker and the American automotive giant. Following it, GM India had announced plans to launch a series of vehicles using platforms of the Chinese automaker.

Source:http://economictimes.indiatimes.com/...w/16837472.cms

I wonder how this would affect the new SAIC cars to be launched this year - Sail UVA, Sail and Enjoy.

Judging by the intial scoops - my gut feeling is that the products wont be a market success (Unless pricing turns out to be a big plus point for them). With SAIC having less control, these products could end up getting step-motherly treatment from GM India.

IMO they wasted a perfectly good oppurtunity. The new Aveo series would have been a good contender in the premium hatch - compact sedan segment.

This is more business maneuvering rather than anything else.

SAIC would have imagined that buying up half of GM India would give them a portal to ship and assemble cars in India slowly making this a dumping ground for cheap chinese cars.

3 years after their investment they have seen absolutely no return. Their attempts to launch wulings, dinglings, dumplings etc..etc.... are yet to bear fruit.

To top this the local chinese brands have been struggling against the MNC brands big time in china. From owning half the market the chinese brands have been squeezed to a 37% market share in less than 2 years and its quickly falling!!

SAIC must be looking at consolidating operations and encashing an entity that is not serving its purpose makes sense.

Quote:

Originally Posted by shortbread (Post 2934846)

3 years after their investment they have seen absolutely no return. Their attempts to launch wulings, dinglings, dumplings etc..etc.... are yet to bear fruit.

Ha Ha Ha. I feel that this is a strategic move by GM as if SAIC was owning a majority/50 % the market perception would be of a "Chinese" company and they did not want that to happen.

Quote:

Originally Posted by shortbread (Post 2934846)

3 years after their investment they have seen absolutely no return. Their attempts to launch wulings, dinglings, dumplings etc..etc.... are yet to bear fruit.

How can that be?

All the new gen Chevy's planned for this year are SAIC products- Sail U-VA, Sail and Enjoy MUV. 3 products back to back in a year - what more they could have asked for? IMO - they got a very good chance at the market, though it was a big loss of oppurtunity for Chevy.

Another related article. I am unable to understand the quoted portion. Experts, please guide.

Quote:

More puzzling is GM’s strange Indian joint venture with its Chinese partner SAIC. In late 2009, GM rolled its Indian operations into a 50-50 joint venture with SAIC, known as the Hong Kong Joint Venture, or HKJV. By the first quarter of 2011, that venture had lost enough value for GM to record an impairment of $39m and “other charges totaling $67m.” From there things get strange. According to GM’s 10-Q:

“We were informed of SAIC-HK’s intent to exercise its right to not participate in future capital injections in HKJV. If this occurs we plan to settle the promissory note in the three months ending September 30, 2012 and provide an additional equity investment of $125 million into HKJV. As a result SAIC-HK’s interest in HKJV would be diluted from 50% to 9%. We also anticipate that the shareholders agreement would be amended such that we obtain control of and consolidate HKJV.”

It would seem that GM is buying its partner out of the Indian arrangement at a cost of $125m, ...

Source:http://www.thetruthaboutcars.com/201...o-foreign-aid/

Quote:

Originally Posted by CrAzY dRiVeR (Post 2934901)

Nope they are GM products, saic being the local chinese manufacturing partner. Big chunk of the Sail, UVA profits/royalties will go to GM with saic being the bottom feeder of the supply chain. Even the rebadged petrol wuling MUVs (aka enjoy) would need diesel power-trains which saic don't have and the only solution was to use GMs leverage again to get hold of Fiat MJD units.

For saic to really make money from this operation they would have to start assembling their own brand models in India which GM would never allow to happen. This whole venture did not really benefit the chinese any which way, good riddance!!

Quote:

Originally Posted by sarthakgupta (Post 2935012)

Another related article. I am unable to understand the quoted portion. Experts, please guide.

Say both of us started a business for Rs.20 with each of us putting in Rs.10, then we would be equal shareholders; i.e. 50:50

Sometime down the line the business requires a further cash injection of Rs.20. This time though you decide that you don't want to pour in more money as you don't see the worth. Me on the other hand decides to invest the whole Rs.20, effectively making it a Rs.40 business in total. But from the initial 50:50 partnership its now 25:75, i.e. 25 for you (Rs.10) and 75 for me (Rs.10+Rs.20).

Similarly the chinese folk (saic) informed GM they were not putting in more money into GM's Indian operations so when GM did invest another $125mill their shares rose from 50 to 93%.

Quote:

Originally Posted by shortbread (Post 2935311)

Similarly the chinese folk (saic) informed GM they were not putting in more money into GM's Indian operations so when GM did invest another $125mill their shares rose from 50 to 93%.

I think in this example, GM bought the 43 per cent from SAIC. So not that it invested additional 20rs, but actually bought back 9rs from SAIC, thus SAIC's share is now only 1 re out of 20, and GM 19 out of 20.

I see this as a strong, affirmative step in the right direction by GM. It shows they're serious about the Indian market and willing and committed to investing in the future. They see serious growth prospects, hence are willing to take risks by upping their stake. Going forward, it also gives them the latitude to introduce other brands from their pretty strong global portfolio. Good for them!

Quote:

Originally Posted by shortbread (Post 2935311)

Nope they are GM products, saic being the local chinese manufacturing partner.

Shanghai GM is a joint venture between SAIC and GM, where GM holds only 49% stake. SAIL is a product from Shanghai GM and not GM.

SAIL was designed and engineered by PATAC which is a 50-50 joint venture between GM and SAIC. Again - its not a GM product.

Enjoy was developed and built by SAIC-GM-Wuling - a joint venture in which SAIC has a 50.1 percent stake, GM China a 44.0 percent stake and Wuling Motors a 5.9 percent stake.

Now which part makes these cars GM products?

Quote:

Originally Posted by shortbread (Post 2935311)

Even the rebadged petrol wuling MUVs (aka enjoy) would need diesel power-trains which saic don't have and the only solution was to use GMs leverage again to get hold of Fiat MJD units.

Agreed on the powertrains part though- the diesel engine is from GM stable. Any idea about the petrol motors on these 3 cars?

Quote:

Originally Posted by CrAzY dRiVeR (Post 2935847)

Now which part makes these cars GM products?

The stakes don't reveal the real picture do they??!!!

Just because Hero and Honda used to have equal shares does it mean Hero was responsible for one half of the development........NO.

GM or any foreign car maker for that matter cannot hold a majority stake in its chinese venture or go at it alone. Its mandatory that they have a chinese collaborator and let it hold equal if not majority stake.

GM does not need saic!!!! Do you think GM needs technical assistance from the chinese??!! If Gm has to set up a R&D centre in china the rules stipulate saic or a local partner have to own at least half of it.

Had the chinese govt. revised the rules and let the foreign car makers go at it alone the chinese brands would be extinct. Already despite being at the mercy of their local partners the global brands have cornered nearly 70% of the market.

Unfortunately for the chinese makers their govt. cannot babysit them in India.