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Rejig to spare GM arm

By Li Fangfang (China Daily)
Updated: 2009-02-19 07:53

A man rides a bicycle past a Buick car manufactured by a joint venture between General Motors and China's Shanghai Automotive Industry Corp in Shanghai. Bloomberg News

General Motors' proposed $30-billion restructuring plan would not impact its China operations, the company's local unit and analysts said separately.

"China's automobile market has shown increased sales and we are still profitable here," GM China said in a statement yesterday. "The company has maintained its leadership position among multinational automakers here. That makes it possible for us to continue developing new projects in China by using internal capital," it said.

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The huge potential of the Chinese auto market means GM is bullish about its prospects in the country. "China is one of our most important strategic markets. It is vital to GM's global business growth," the struggling automaker said.

GM sold 111,282 vehicles in January, up 3.3 percent year-on-year even as China's total domestic sales fell by 14.35 percent from a year earlier in January, to 735,500 units. Sales were 0.83 percent lower than in December due to falling demand.

"GM's business in China will not be affected by its US restructuring plan," said Yale Zhang, an auto analyst based in Shanghai. "The company's confidence in China's automobile market and its joint ventures' profitable business will keep GM focused here," Zhang said.

Between 2004 and 2008, Shanghai GM, the US automaker's 50-50 joint venture with China's SAIC Group, made a profit of 19.7 billion yuan. Another joint venture, SAIC-GM-Wuling, has maintained its top slot in light commercial vehicle sales for three years.

GM China will launch 13 new models this year. The company will also not make any changes to its ongoing projects. GM is in fact talking to China's FAW Group to invest in a joint venture that will produce commercial vehicles, it said.

Regarding its proposed global workforce reduction plan, GM China said it was "working to determine how these changes would impact our own operations. We have done some preliminary work and expect the impact will be limited."

However, due to GM's plan to spin-off the Hummer, Saab and Saturn brands, "there would be no new models coming to China under these brands," said Hui Yumei, an analyst with Sinotrust, an automobile industry research company.

"But it will not influence Shanghai GM's product lineup - Buick, Cadillac and Chevrolet - as it has made a decision to focus on six brands, including these three," said Hui.