GM, Shanghai company merge plants
By Gong Zhengzheng (China Daily)
Updated: 2004-03-08 08:39

General Motors (GM) and its main Chinese partner Shanghai Automotive Industry Corp (SAIC) signed two deals in Beijing yesterday to jointly merge an engine plant and a vehicle plant in two provinces.

Under one of the two agreements, GM, SAIC and their joint venture Shanghai GM will respectively acquire a 25, 25 and 50 per cent stake in former South Korean auto maker Daewoo Motor's engine joint venture in Yantai, a port city in East China's Shandong Province.

The engine venture will be named Shanghai GM Dongyue Automotive Powertrain Co Ltd, and will have an annual manufacturing capacity of 300,000 engines and transmissions, GM said yesterday in a statement.

The engine plant was formed in 1996 with a total investment of 2.28 billion yuan (US$275.3 million).

From the beginning, Daewoo controlled a 50 per cent stake in the plant, and the other 50 per cent was held by First Automotive Works Corp (FAW) - China's biggest vehicle producer in Northeast China's Jilin Province - and Shandong Automobile Corp.

In 2002, FAW and the Shandong auto firm transferred all of their shares to the Shandong International Trust and Investment Corp.

But the engine plant came to a standstill in 2000 as a result of Daewoo's bankruptcy.

The acquisition came after GM, SAIC and Shanghai GM bought out a vehicle plant in Yantai, making Daewoo cars, which was owned by the Shandong provincial government, at the end of 2002.

The vehicle plant, named Shanghai GM Dongyue Automobile Co Ltd, now produces the Buick Sail compact car, which was previously made by Shanghai GM.

According to the other agreement signed yesterday, GM, SAIC and Shanghai GM will also control 25, 25 and 50 per cent stakes in the US-based auto maker's another vehicle joint venture in Shenyang, the capital of Northeast China's Liaoning Province.

GM previously had a 50 per cent stake in the joint venture in Shenyang, called Jinbei GM.

Jinbei Automobile, a Shanghai-listed van maker, had a 25 per cent stake in the joint venture.

The remaining 25 per cent was jointly held by the Liaoning Development Group, Liaoning Energy General Co and the Shenyang Automotive Industry Asset Management Co.

Jinbei GM, set up in 1998 with a total investment of US$230 million, started to produce GM's Chevrolet Blazer sport utility vehicles (SUV) and pickups at the end of 2000.

After the two latest acquisition deals, Shanghai GM will be responsible for the management of the SUV plant in Shenyang and the engine plant in Yantai, GM said.

But no further financial details about the two deals was released.

"The two deals represent a significant extension of our strategic partnership with SAIC and Shanghai GM. They will expand our presence in the world's most dynamic vehicle market," said Phil Murtaugh, chairman of GM China Group.

GM and SAIC also runs a mini vehicle joint venture in South China's Guangxi Zhuang Autonomous Region with a local partner.

Shanghai GM, in which both GM and SAIC control a 50 per cent stake, is the third-largest passenger car manufacturer in China after German Volkswagen's two joint ventures in Shanghai and Jilin.

It aims to increase its sales to 285,000 cars this year from 201,000 units last year.

Shanghai GM, which is now producing the Buick Regal and Excelle sedans, and Buick GL8 commercial wagon, plans to introduce Cadillac limousines later this year.

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