A Chinese-owned GM, it could

happen
As Chinese automakers eye bargains around the world, some think
they could make a play for GM once it goes public.
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By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 24, 2009: 4:46 AM ET

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General Motors recently showed reporters and select members of the public what it plans to build over the
next two years.
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NEW YORK (CNNMoney.com) -- GM could one day be Chinese owned.

A shocking concept for the ultimate all-American company, but one some auto
industry experts say isn't too far-fetched.

"I can tell you right now the Chinese are shopping heavily in the U.S. auto sector,"
said David Cole, chairman of the Center for Automotive Research, a Michigan think
tank.

Cole said such a deal isn't imminent and wouldn't happen until GM starts selling
shares to the public, likely a year or more from now. But he says buying GM would
be a major opportunity for the nascent Chinese auto industry.

"The Chinese have a lot of our money and they're looking to invest it," he said.

The Chinese have already shown an eagerness to buy some of the damaged brands
being cut loose by U.S. automakers. GM is in the process of finalizing the sale of its
Hummer unit to Sichuan Tengzhong Heavy Industrial Machinery. Ford Motor
(F, Fortune 500) is in talks to sell its Swedish car unit Volvo to Chinese automaker
Geely.
Consolidating power in China
The Chinese industry is extremely splintered, with more than 100 automakers, some
no more than regional players. But the Chinese government is pushing the industry
to consolidate; something experts think will greatly reshape the industry in the next
few years. And the new larger players will become even better positioned to make a
play for troubled automakers around the globe.

Cole isn't saying that GM would be China's top purchase target in the near term.
Other experts see it as more likely for the Chinese to buy a second-tier Asian or
European manufacturer, or perhaps even Chrysler if its combination with Fiat Group
doesn't go as well as planned.

But a Chinese-owned GM wouldn't be a shock to Bob Schulz, the top automotive

credit analyst at Standard & Poor's, not after all the other changes the company and
the industry have seen in recent years.

"Assuming there's no government restrictions on something like that, anything is

possible," said Schulz.

It wouldn't be a cheap purchase, despite all the company's losses in recent years.
Rod Lache, auto analyst for Deutsche Bank, recently estimated that based on the
company's bond prices, the market is now valuing it at about $42 billion. That price
could rise assuming sales improve and the company returns to profitability before it
sells shares.

Michael Robinet, VP, global vehicle forecasts, CSM Worldwide, wouldn't comment
on which global automakers the Chinese might be interested in buying, but he
agreed there's a lot of interest within the industry for such purchases beyond the few
small damaged brands purchased so far.

Such purchases would give the Chinese access to needed technology, as well as
auto plants around the globe to serve various markets. He said the dealership and
other distribution networks are also very important for China's hopes to eventually
become a global player.

"It's all about ease of entry into new markets," he said. "It's much easier if they buy
an established distribution channel rather than introduce their cars into the U.S. or
European market."
China: World's biggest market
China has moved ahead of the United States this year as the world's largest market
for sales of cars and light trucks. Even if there is a rebound in U.S. sales in coming
years that puts American car buyers back in the lead, no expert thinks they'll be able
to stay ahead of Chinese buyers for very long, especially with so many Chinese still
without cars.

"The potential for U.S. auto sales is dwarfed by the growth potential of China," said
Kim Corth, president of auto consultant IRN.

China is arguably already the most important market for GM, in terms of both growth
and profits.

The company has sold 1.5 million vehicles in China through the first 10 months of
the year, up 60% from a year earlier. By some measures GM and its joint ventures
have the largest market share in China, and its China sales now trail U.S. sales by
only 14%.

While GM officials say they expect Chinese sales growth to slow and U.S. sales to
rebound in the coming years, it's not tough to see GM selling more vehicles in China
than in its home U.S. market, perhaps as soon as the next decade. Already the
company sells far more vehicles overseas than it does in North America.

More importantly, China is already in the lead for GM in terms of profits. While it
does not break off earnings from China specifically, the country was the major driver
of the $429 million it made in the Asia-Pacific region in the third quarter, which ran
from its emergence from bankruptcy July 10 through Sept. 30.

The rest of GM's overseas auto operations lost a combined $192 million in the same
period, while its North American losses came to $651 million during that period.

All that strength in China could leave GM's U.S. ownership somewhat vulnerable. If
GM's major Chinese partner, SIAC, wanted to buy a controlling stake in GM, the
company would have a difficult time saying no, given its importance to the
company's future.
The federal government took a 61% stake in GM in return for the $50 billion in
pumped into the company to keep it operating late last year and through its
bankruptcy reorganization earlier this year.

Officials from both the Obama administration and GM have said the intention is for
GM to have an initial public offering as soon as the second half of 2010 in order to let
shareholders, including the Treasury Department, sell their shares as soon as
possible. But it is also unlikely that even those eager sellers would dump all their
shares at once, so it could take some time after the IPO for a majority of GM to be
available on the open market.

GM spokeswoman Renee Rashid-Merem wouldn't comment directly on the idea of a

Chinese-owned GM.

"Clearly we've had successful partnerships with the Chinese joint ventures and we're
looking to that market for growth," she said. "But relative to an IPO and who might
buy into the company, we're not going to comment on any of those particulars."

Of course there are plenty of hurdles to a Chinese purchase of a company as large

and symbolically important as GM. One would be political.

"I think there would be a national outcry in that regard," said IRN's Corth, who points
out the backlash when Chinese oil company CNOOC tried to buy Unocal in 2005.
GM, despite its troubles, is far more of a U.S. icon than Unocal.

But when the China-Unocal deal was blocked, there was a U.S. buyer, Chevron,
ready to step in and buy the company. There's not likely any U.S. company that
would be interested in buying control of GM.

The Treasury Department, the union-controlled trust funds and the former GM
bondholders who got stock in company in the bankruptcy process are all on record
wanting to sell their stakes in the automaker as soon as possible. Those three
groups hold almost all the GM shares.

Beyond those political considerations though would be the question of whether any
Chinese automaker feels it is ready to take on a challenge the size of GM.
"They're a little ways away from a purchase of that size," said Tim Dunne, an expert
on the Chinese auto industry at J.D. Power & Associates. "They're still getting their
own feet wet in terms of being automakers. They know how tough it is to manage a
company the size and complexity of GM."

First Published: November 23, 2009: 4:12 PM ET

http://money.cnn.com/2009/11/23/news/companies/gm_china/index.htm
The General Motors Company, also known as GM, is a United States-based
automaker with its headquarters in Detroit, Michigan. The company manufactures cars
and trucks in 34 countries, recently employed 244,500 people around the world, and
sells and services vehicles in some 140 countries.[2] By sales, GM ranked as the largest
U.S. automaker and the world's second-largest for 2008,[2] having the third-highest 2008
global revenues among automakers on the Fortune Global 500.[3]

On June 1, 2009, the company filed for Chapter 11 bankruptcy, which was completed on
July 10 of that year. It was thereafter reorganized as a new entity that acquired the most
valuable assets. GM became majority owned by the United States Treasury and, to a
smaller extent, the Canada Development Investment Corporation[4] and the government
of Ontario,[5][6][7] with the U.S. government investing US$57.6 billion under the Troubled
Asset Relief Program.[8]

The company focused its business on its four core North American
brands: Chevrolet, Buick,GMC, and Cadillac. In Europe, following negotiation to sell a
majority stake of German subsidiary Opel, GM decided to retain full ownership.[9] GM
sold Saab Automobile to Spyker Cars NV, and closed its doors to the Hummer,
[10]
Pontiac, and Saturn brands, the latter two dissolved under the former General Motors
Corporation, now known as Motors Liquidation Company.

Company overview

The General Motors GMT800 truckassembly line. (2006)

In 2009, GM employed approximately 244,500 people around the world.

The Renaissance Center, located in Detroit, Michigan, United States, is GM's global
headquarters. In 2008, GM sold 8.35 million cars and trucks globally.[11] GM is the
majority shareholder in GM Daewoo Auto & Technology Co. of South Korea and has
collaborations with Shanghai Automotive Industry
Corporation of China, AvtoVAZ of Russia, and most
recently, UzAvtoSanoat of Uzbekistan. GM has had collaborations with various
automakers including Fiat (see GM/Fiat Premium platform) and the Ford Motor
Company.[citation needed] GM retains various stakes in different automakers. GM's biggest
success internationally has been its performance in China, where GM's sales rose 66.9
percent in 2009, selling 1,830,000 vehicles and accounting for 13.4 percent of the
market.[12]

Total Global
Year Production
(thousands)[13]

2007 9,286

2008 8,144

2009 6,503

GM worldwide vehicle sales by Top-four markets/regions by vehicle

country 2008[14] sales in 2008 (thousands)
(thousands)

Rank Market
Vehicle
Rank Market in Market/Region share
Vehicle sales
in Country share GM (%)
sales
GM (%)

1 North America 3,552 21.9%

United
1 2,981 22.1%
States
2 China 1,095 12.0%

2 China 1,095 12.0%

3 European Union 905 12.3%

3 Brazil 549 19.5%

4 South America 815 20.8%

United
4 384 15.4%
Kingdom
5 Canada 359 21.4%

6 Russia 338 11.1%

Germa
7 300 8.8%
ny

Mexic
8 212 19.8%
o

Austral
9 133 13.1%
ia

South
10 117 9.7%
Korea

11 France 114 4.4%

12 Spain 107 7.8%

Argent
13 95 15.5%
ina

Venez
14 91 33.3%
uela

Colom
15 80 36.3%
bia

16 India 66 3.3%
[edit]Structure
See also: Cadillac, Buick, GMC (automobile), Chevrolet, GM
Daewoo, Opel, Vauxhall, Holden, List of GM factories, and List of GM engines

GM is structured into the following segments:

Number of employees
Segment
March 2010[15]

GMNA (GM North America) 103,000

GMIO (GM International

57,000
Operations)

Adam Opel GmbH (Europe)[16][17] 47,000

Total number of employees 207,000

[edit]Management
People's Republic of China
The Buick brand is especially strong in China, led by the Buick Excelle subcompact. The
last emperor of China owned a Buick.[64] TheCadillac brand was introduced in China in
2004, starting with exports to China. GM pushed the marketing of the Chevrolet brand in
China in 2005 as well, moving the former Buick Sail to that marque. The company
manufactures most of its China market vehicles locally throughShanghai GM, a joint
venture with the Chinese company SAIC, which was created on March 25, 1997. The
Shanghai GM plant was officially opened on December 15, 1998, when the first
Chinese-built Buick came off the assembly line. The SAIC-GM-Wuling Automobile joint-
venture is also successfully selling microvans under the Wuling marque (34 percent
owned by GM).

In August 2009 the joint venture of FAW GM Light Duty Commercial Vehicle Co Ltd was
formed that mainly produces Jiefang light-duty trucks.[65]

GM increased its sales in China by 68 percent to 230,048 vehicles in March 2010,

outsold its U.S. sales of 188,546 by 22 percent. And the company said it is “on track” to
sell more than 2 million vehicles in China in 2010, four years ahead of its plan.[66] GM
plans to invest $250 million to create a research facility in Shanghai to develop hybrid
cars and alternative fuel vehicles.[citation needed]

GM made Cadillac a chief sponsor of the state-run China Film Group Corporation's Birth
of a Party, a film dramatizing the events leading to the creation of the Chinese
Communist Party in 1921 after Russia’s October Revolution in 1917.[67]

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June 1, 2009.
By manufacturer
[hide]

v•d•e

« previous year — Top motor vehicle manufacturing companies by volume 2009 next year »
Total motor vehicle production
Group 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,0007,0
Key Cars Light Commercial Vehicles Heavy C
Toyota
G.M.
Volkswagen
Ford
Hyundai
PSA 3,042,311
Honda 3,012,637
Nissan 2,744,562
Fiat 2,460,222
Suzuki 2,387,537
Renault 2,296,009
Daimler AG 1,447,953
Chana Automobile 1,425,777
B.M.W. 1,258,417
Mazda 984,520
Chrysler 959,070
Mitsubishi 802,463
Beijing Automotive 684,534
Tata 672,045
Dongfeng Motor 663,262
FAW 650,275
Chery 508,567
Fuji 491,352
BYD 427,732
SAIC 347,598
Anhui Jianghuai 336,979
Geely 330,275
Isuzu 316,335
Brilliance 314,189
AvtoVAZ 294,737
Great Wall 226,560
Mahindra 223,065
Shangdong Kaima 169,023
Proton 152,965
China National 120,930
Volvo 105,873
Chongqing Lifan 104,434
Fujian 103,171
Kuozui 93,303
Shannxi Auto 79,026
 Porsche 75,637
Ziyang Nanjun 72,470
GAZ 69,591
Navistar 65,364
Guangzhou Auto 62,990
Paccar 58,918
Chenzhou Ji'ao 51,008
Qingling Motor 50,120
Hebei Zhongxing 48,173
Ashok Leyland 47,694
Key Cars Light Commercial Vehicles Heavy C
Total: 60,499,159 Cars: 51,075,480 LCV: 7,817,520 HCV
Reference: "World motor vehicle production by manufacturer: World ranking of manufacturers 2009". OICA. July 2010.

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Automotive industry crisis of 2008–2010
From Wikipedia, the free encyclopedia
(Redirected from Automotive industry crisis of 2008–2009)

Part of a series on:

2007–2010 financial crisis

Major dimensions[show]

Countries[show]

Summits[show]

Legislation[show]

Company bailouts[show]

Company failures[show]

Causes[show]

Solutions[show]

v•d•e

The automotive industry crisis of 2008–2010 was a part of a global financial

downturn. The crisis affected European and Asian automobile manufacturers, but it was
primarily felt in the Americanautomobile manufacturing industry. The downturn also
affected Canada by virtue of the Automotive Products Trade Agreement.[1]

The automotive industry was weakened by a substantial increase in the prices

of automotive fuels[2]linked to the 2003-2008 energy crisis which discouraged purchases
of sport utility vehicles (SUVs) and pickup trucks which have low fuel economy.[3] The
popularity and relatively high profit margins of these vehicles had encouraged the
American "Big Three" automakers, General Motors, Ford, andChrysler to make them
their primary focus. With fewer fuel-efficient models to offer to consumers, sales began
to slide. By 2008, the situation had turned critical as the credit crunch [4] placed pressure
on the prices of raw materials.

Car companies from Asia, Europe, North America, and elsewhere have implemented
creative marketing strategies to entice reluctant consumers as most experienced double-
digit percentage declines in sales. Major manufacturers, including the Big Three
and Toyota offered substantial discounts across their lineups. The Big Three faced
criticism for their lineups, which were seen to be irresponsible in light of rising fuel prices.
North American consumers turned to higher-quality and more fuel-efficient product of
Japanese and European automakers. However, many of the vehicles perceived to be
foreign were actually "transplants," foreign cars manufactured or assembled in the
United States, at lower cost than true imports.[5]

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