GM to join China mini-van JVs by June

["Ulhas Joglekar" <joglekarulhas@xxxxxxxxxxx>]

The Times of India

MONDAY, MAY 20, 2002

GM to join China mini-van JVs by June

REUTERS

SHANGHAI: General Motors said on Monday it plans to set up a joint venture
with China's seventh largest automaker by June, gaining a window into what
it says is a potentially lucrative market for mini-vans and mini-trucks.

The US auto giant is in the final stages of talks toward an alliance with
domestic automaker SAIC-Wuling Automobile, GM spokeswoman Daphne Zheng said.

"We're getting closer to launching a new partnership... We're targeting
June," Zheng said. "It's a good opportunity to tap into the potential of the
mini-vehicle market in China, which is one of the largest segments."

GM executives have said the China mini-vehicle market has an annual volume
of about 541,000 units.

China granted preliminary approval to GM last December to establish a
partnership with SAIC-Wuling, based in the country's southwestern region of
Guangxi.

Zheng declined to specify the stake GM would acquire.

Liuzhou Wuling Automotive - China's seventh largest vehicle producer - was
renamed SAIC-Wuling in 2001 after Shanghai Automotive Industry acquired a
75.9 per cent stake in the mini-van and mini-truck maker.

GM has said SAIC's stake was the first step toward forming a three-way
alliance. The US giant earlier scrapped a previous bid to buy a 34 per cent
share in Wuling through its plan to list on the B share market.

That IPO plan was put on ice after the formerly foreigners-only market was
opened to Chinese early last year.

Industry sources said the new entity would have investment of nearly $100
million, 66 per cent owned by SAIC-Wuling and 34 per cent by GM. Wuling
officials have said SAIC's stake could be diluted to 50.1 per cent after GM
comes in.

One industry source said GM could provide Wuling with technology to
manufacture multi-purpose vehicles. The source added that Wuling soon
planned to boost capacity to 180,000 vehicles from about 150,000 units in
2000.

Wuling officials confirmed discussions with GM were taking place but
declined to elaborate.

Shanghai's official Liberation Daily said at the weekend the partnership
plans to boost capacity to 300,000-400,000 units in 10 years.

SAIC-Wuling recorded a turnover of 3.7 billion yuan in 2001 after selling
more than 120,000 vehicles, the newspaper said.

SAIC is one of three auto giants that the government has said it will
support over the next five years while forcing dozens of smaller
manufacturers out of business in an industry shake-up.

GM now has a $1.5 billion joint venture with SAIC called Shanghai GM which
makes Buick cars and wagons.

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