Hummer deal: GM 'satisfied' with sale terms

Slides
Photos

(China Daily)
Updated: 2009-10-19 13:36

Editors' note: Public opinion and insider views vary widely on Sichuan Tengzhong's surprise bid to buy and continue producing GM's Hummer brand. China Daily reporter Zhang Ranran recently interviewed both GM President and CEO Fritz Henderson and Nick Reilly, GM executive vice-president and head of the auto giant's recently formed GM International Operations (GMIO), to hear their views on the potential sale.

Q: Sichuan Tengzhong is paying about $150 million for the Hummer unit, significantly lower than its valuation in bankruptcy filings last spring. Are you satisfied with the deal? What do you think of the prospects for approval by Chinese authorities?

Fritz Henderson: We have not made specific terms public. I have read the same article as you did regarding the $150 million, but am not in a position to confirm it.

We are satisfied with the terms and conditions of the deal, so the answer is yes. We went through a competitive auction process, several parties were interested and Tengzhong came forward.

They are very serious. They put a significant amount of time, effort and attention into this deal. We negotiated - and yes, we are satisfied.

In terms of the approval process, we've had dialog with Tengzhong. It's pretty much their responsibility as the buyer, but I think they are confident and hopeful. We will support them in whatever they need to obtain approval for this.

Beyond that I really couldn't comment. It's obvious that they feel strongly that the project should receive approval.

Q: Why did you choose Shanghai as the location for GMIO and Nick Reilly as its leader?

A: In 2004, we moved our Asia-Pacific headquarters to China, specifically Shanghai. We did so because we were very clear then that China was the axis of our operation here in Asia. We have so many operations in China, Korea and Japan - as we talked about reorganizing the company and the location of international operations, it was very logical to place it right here. China is the largest market for us outside the US.

Nick's responsibility is for everything outside North America. China is such an important market for us in many ways and it will be even more so in future.

Q: How do you utilize the China market and manufacturing resources to promote your low-price strategy?

A: We have the benefit of having GM development centers that are actively involved in low-cost cars. Here, the PATAC (Pan Asia Technical Automotive Center, a research and development unit based in Shanghai), for example, is in charge of developing the new Sail, the next car to be launched. It will focus more on the price point.

We are going to continue to improve our operations here in China. Through PATAC as well as Shanghai GM and SGMW (its joint venture that makes the Wuling minivan), we are going to develop low-cost products for different market segments.

You are going to see continued innovation and collaboration, potentially between operations in Brazil, Korea and China to pursue products, powertrains and technologies that have lower costs and more profitability in fast growing markets.

Q: What new models are you planning to launch in China this year and in the near future?

A: Shanghai GM will unveil an important new small car before the upcoming Chinese New Year, the Chevrolet New Sail.

Primarily designed by PATAC in line with GM's global vehicle development process, the new car is tailor-made for Chinese customers and is expected to have great potential in other emerging markets

By the end of 2010, GM will roll out five new models in China under its Buick brand and five new Chevrolet models.

Over the next five years, GM will introduce more than 30 all-new or refreshed models across all of its brands in China.

After its restructuring on July 10, GM's preliminary global market share in the third quarter of 2009 was 11.9 percent, up 0.3 percentage points from 11.6 percent in the first half of the year. The company had a 12.4 percent global market share in 2008.

In the first nine months of this year, GM and its joint ventures sold 1,292,549 vehicles, a 55.6 percent increase from the same period of 2008, setting a new sales record.

Q: As China surpassed the US as the world largest auto market, what do you think of GM's future?

Nick Reilly: We haven't changed our investment plan. We always thought that the Chinese market is going to be extremely important. The fact is that it became number one this year. It has much to do with weakness of the US market as it does with strength in China.

We are very happy to invest in China and we are going to continue to do that. We invest billions of dollars a year.

Q: In recent years, many Chinese car companies are interested in overseas mergers and acquisitions. What is your view?

A: I think that is fine. There is no reason why a Chinese company shouldn't purchase a foreign company. I believe China auto companies will play an increasingly important role in the global auto market.

(For more biz stories, please visit Industries)