GM will transfer a 1 per cent stake in its China passenger-car venture to partner SAIC Motor Corp while forming a new venture with the Shanghai-based company to sell low-cost vehicles in India.
GM agreed to transfer the stake in Shanghai General Motors to SAIC, China's biggest carmaker, the companies said in a joint statement today.
The two companies also plan to form an equally controlled joint venture in the first quarter of next year to make and sell small cars and mini-commercial vehicles in India.
The India venture may help Detroit-based GM take a bigger share of the South Asian nation's vehicle market
while giving SAIC a foothold in the world's second-most populous nation. Along with the stake sale, it signals a growing role for SAIC within the alliance, said Michael Dunne, president of consulting company Dunne & Co in Hong Kong.
"It's a declaration that SAIC is emerging as a power to be reckoned with, not only in China but now globally," Mr Dunne said. "Its ambition is to be a global carmaker."
The transfer of a 1 per cent stake in the China venture will help SAIC consolidate revenue from the company, "which will provide investors a clear understanding of its business," the statement said, without disclosing terms of the transaction.
The venture will continue to operate under the same management structure, it said. The India venture will be based in Hong Kong and will use GM's two manufacturing facilities and a powertrain plant in India.
Bloomberg