New GM-China tie-up to make small cars for India

[pampango]

Source: BBC

US car giant General Motors plans to form a new venture with its Chinese partner, SAIC, to focus on the small car market in India. It aims to produce the vehicles within India itself, making SAIC the first major Chinese company to so do. GM has said it wants to use India as a small car production base for export.

At the same time, GM announced it would turn over 1% of its biggest Chinese joint venture to SAIC - which would give the Chinese majority ownership. Analysts said GM's decision to surrender control of its main China operation and share access to India was a bad sign for GM. John Bonnell, director of JD Power in Bangkok, said: "I can only imagine it's urgent need for money."

Although the deal with GM makes SAIC the first Chinese carmaker to come to India, analysts say the company will have to battle Indian consumer prejudice against Chinese-made goods.

Another, separate, announcement on Friday by General Motors said it was buying out the other half of an existing joint venture with Japan's Suzuki in Canada. It leaves GM without a Japanese production partner. Earlier this year, it cut manufacturing links with Toyota in California.



Read more: http://news.bbc.co.uk/2/hi/business/8394640.stm