In the Chinese auto market, the alliance between SAIC and GM can be said to have been refined into steel. Today, when both sides have problems at the same time, a seemingly well-designed clever layout is likely to resolve their passive situation.
South Korea's Daewoo suffers from a shortage of funds. GM raises money overseas
U.S. General Motors was born again after bankruptcy protection. Although performance began to gradually improve, the shortage of funds, especially cash flow, has been a headache for the past year. After being taken over by the U.S. government, GM’s “behavioral capabilities†are also obviously constrained. According to the relevant agreements, the government’s bailout funds cannot be used for investment in overseas markets. Therefore, when GM overseas subsidiaries are in urgent need of capital injection from the parent company in the event of a capital crisis, GM can only provide assistance through the financing of its overseas departments.
China is undoubtedly its first choice.
The headquarters of GM International Operations in Shanghai, which is the only international business development department outside the Detroit headquarters, is currently raising funds. According to an auto analyst at an unnamed securities agency, Gasgoo.com stated that the operation center has raised funds. Part of the funds will support U.S. headquarters, while the other part will mainly help South Korea’s Daewoo, which is in a state of huge losses.
Under the influence of the financial crisis, investment suffered from the long-term foreign exchange transactions failed. Since the second half of 2008, Daewoo has lost nearly 3 trillion won. Daewoo’s equity structure shows that GM holds 51% of the shares, and its second largest shareholder is Korea Industrial Bank, which is also Daewoo’s main creditor’s bank and holds 28% of shares. Therefore, when Daewoo has suffered such a huge loss, as the largest shareholder, GM has an unshirkable responsibility.
According to previous reports from local Korean media, Gang and former GM Han Desheng, who recently resigned, had visited South Korea in mid-October this year, and when he met with the president of the Korea Industrial Bank in Seoul, he revealed that he decided to support Daewoo with 250 billion won. However, the industry bank is not satisfied with the amount given by GM. It said that GM must use 8,000 to 900 billion won (converted to the current exchange rate of 1,150 to 1, about 700 to 800 million U.S. dollars) before agreeing to Daewoo provided follow-up loan assistance. And asked GM to develop a long-term survival plan for Daewoo. As for the shy GM, how to pay this money made Han Desheng very bad at the time.
No one was forced to close Saturn's order, and Tengzhong's purchase of “horses†has not yet resulted. Konishk’s acquisition of Saab’s halfway roads has caused the compulsive cash flow of GM to be a hit.
Han Desheng’s career in GM has thus ended.
With no choice, GM finally decided to take its current best overseas asset, Shanghai GM.
It is reported that GM intends to transfer 1% of Shanghai General Motors shares to SAIC Motor once for a total of about 600 million U.S. dollars in cash, and this part of the funds is not enough to meet the amount of Daewoo support. Therefore, industry insiders told Gasgoo.com that SAIC’s asset restructuring does not exclude more joint ventures between the two parties. It is understood that GM currently has 8 joint ventures with SAIC.
New Deal launches SAIC's absolute holding of Shanghai GM is imminent
While GM is raising the money to make the final "killer", SAIC has also seen a lot of trouble with its strongest partner in China.
According to the relevant articles of association of the new “Enterprise Accounting Standards†that will be implemented next year, Shanghai Automotive Group Co., Ltd. (hereinafter referred to as “Shanghai Autoâ€), which holds 78.94% of SAIC’s shares, wants to continue integrating Shanghai GM’s performance into its financial statements. The only way to increase the holding of shares in Shanghai GM to achieve absolute control is currently reasonable.
A car researcher at the Aichi Securities Research and Development Headquarters, who declined to be named, told Gasgoo.com that the new "Enterprise Accounting Standards" is expected to be formally implemented next year. The specific time has not yet been set. The researcher also said that from the current point of view, SAIC's asset restructuring is likely to involve some of GM's business in China. As for the specific situation remains to be seen.
All along, Shanghai GM’s investment returns have been an important source of Shanghai Automotive’s profitability, and Shanghai Auto’s profitability is also steadily increasing with the rapid growth of Shanghai GM’s sales volume, improved profitability of bicycles, and the enhancement of economies of scale. It is understood that Shanghai GM's several mid-size car products will be completed next year, together with the market potential of several new cars such as Cruz and New LaCrosse launched this year. The market competitiveness of Shanghai GM will inevitably be further strengthened. Profitability has improved. Therefore, if this big head is lost in Shanghai Automotive's financial statements next year, the resulting losses will be incalculable.
In an interview with Gasgoo.com, former general business development and planning director Zhou Fangyu stated that SAIC Motor’s transfer of 1% equity is related to the new accounting system that will be implemented. SAIC’s original accounting system is its own, in order to comply with the international accounting system. In order to achieve convergence, one must obtain 1% of the shares and 50% of the shares. Otherwise, it will have a great influence on SAIC's ranking in the world, even dropping out of the top 500.
At the same time, as the most excellent asset of GM in the Chinese market, Shanghai GM has been regarded as the most important strategic base in China and even in the Asia-Pacific market. The transfer of 1% of Shanghai General Motors shares to Shanghai Auto meant that the 50:50 stock balance would be broken and further lose its right to speak in the joint venture company.
"The GM is really in big trouble," said a veteran car industry inside the Gasgoo.com telephone interview. "If it's not a big problem, GM will not give up this 1% stake anyway. He GM) is obliged to absolutely own Shanghai GM."
It is understood that through this share transfer, Shanghai Automotive will obtain absolute control of Shanghai GM. As a trading condition, GM will obtain the equivalent cash value of up to 20% of the market value of the joint venture company with SAIC Motor . In addition, the transfer agreement stipulates that General Motors still has equal voting rights in the decision-making of the Shanghai GM JV, and has the right to buy back the transferred shares at a future premium.
This time, he was a moment. For the absolute controlling share that has already been acquired, will SAIC still give up? The future is unpredictable.
GM increases holdings of SAIC-GM-Wuling shares? Does SAIC buy 50% of GM India ?
Sources said that Shanghai Automobile ’s suspension of this sudden announcement may well involve the changes in the shareholding structure of SAIC-GM-Wuling and the latest progress of SAIC's entry into the Indian market.
A long-term research auto analyst of SAIC Group also disclosed to Gasgoo.com that GM transferred its 1% stake in Shanghai GM to Shanghai Auto, and in exchange, it does not rule out GM's increase in shares in SAIC-GM-Wuling.
In the Chinese market, apart from Shanghai GM, GM's second trump card is SAIC-GM-Wuling.
Shanghai Automotive, General Motors (China), and Liuzhou Wuling Co., Ltd. jointly established SAIC-GM-Wuling in November 2002. After years of development, SAIC-GM-Wuling has ranked among the leading companies in the domestic micro-vehicle industry, ranking second with Changan Automobile has opened a gap of nearly 300,000 vehicles. According to statistics, SAIC-GM-Wuling achieved sales of 89,636 units in November, an increase of 62.7% year-on-year. In the first 11 months of this year, its sales volume has surpassed 980,000 vehicles, and the number of annual breakthroughs of 1 million vehicles is almost certain.
The blowout market in the micro-customer market made SAIC-GM-Wuling the biggest beneficiary. Some experts have stated that if the automobile-to-country policy continues next year, its sales volume will be at least equal to this year, and the profit is expected to exceed RMB 2 billion.
The above-mentioned auto analyst said that with SAIC-GM-Wuling ’s sales continuing to rise, GM, which only holds 34% of its shares, is not willing.
Previously, the industry had rumors that the Guangxi government intends to make the GM project. In exchange, the Guangxi government will transfer the 15.9% stake in the name to GM at a low price. However, the matter has not been formally affirmed by both parties.
On September 24 of this year, at the site of the "Direct 2030" event held in Shanghai, Gan Wenwei said in an interview with Gasgoo.com: " General Motors is satisfied with the equity structure of SAIC-GM-Wuling, if the other party is willing to transfer it out. More shares are given to GM, so we will definitely be happy to accept them."
The industry generally believes that given the current very good profitability of SAIC-GM-Wuling , increasing holdings in the company's shares is a step that the General China strategy must take.
For the Indian market, SAIC has always wanted to enter, but simply because of the impact of the Ssangyong incident, they dared not rush to enter. According to overseas media reports, GM has confirmed with SAIC that it will introduce the Wuling mini vehicle to the Indian market. And on a possible basis, other models will also be introduced into the Indian market. As the basis for the cooperation between the two parties, SAIC is very likely to acquire some of the shares of GM India. It is undeniable that SAIC and GM’s cooperation in overseas markets will undoubtedly further consolidate the strategic alliance between the two parties.
Saved and saved? Regardless of the timing, the asset restructuring is a good move for SAIC.
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