Filed under: China, GM, Earnings/Financials
GM may use profits from China to float North American operations
Big Bob Lutz said that GM declaring bankruptcy is "out of the question." Of course, that was two years ago, when things like a $25 billion government loan would have sounded ludicrous. That was also before the auto industry mess got messier, and in order to stay true to those words today, GM is doing whatever it has to do to find money to stay in business. It heard Chrysler has an $11 billion piggy bank and a couple of jewels (Jeep and minivans) and GM said "Come here, girl! Lemme holla at you for a minute!"Now GM is looking at its own international stable, and has its eye on China as a source of stopgap revenue for its North American operations. We've posted before on the fact that GM's international operations aren't doing too badly, and GM China sold 11.5 million vehicles last year -- more than any other manufacturer there. This year, it expects China sales volume to grow by 11- to 12-percent, and that means yuan in the bank.
Lutz said of the China move, "We do not rule out such a possibility under current conditions." These are hard times, but -- just like the good ones -- they're temporary, and GM just needs a little help to get to payday. Using money from one of your branches makes perfect sense to us. What doesn't make perfect sense is that China will get the Cruze the same time as Europe, in early '09, while we in the U.S. have to wait years in line for a car that we've been screaming for. Ah, GM, what are we going to do with you?
[Source: Gasgoo]
Reader Comments (Page 1 of 1)
TruthHurts 9:09AM (10/24/2008)
Japanese vs. Koreans vs. Chinese: http://www.youtube.com/watch?v=GZ3oyo-irJ4
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Gabagool 9:11AM (10/24/2008)
Jonathan "We've posted before on the fact that GM's international operations aren't doing too badly, and GM China sold 11.5 million vehicles last year"-------Dude General Motors LOST 65 Million Dollars in Asia-Pacific region in second Q. I have the source if you want me to back it up.
So how can they bring some "yuan" to US if they do not make any "yuan" in China?
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Paul 10:20AM (10/24/2008)
a 65 million dollar loss, though a loss, really isnt bad on the scheme of things, that can be put against loans and credit and cash money can be transferred here.
Frank Thomas 9:31AM (10/24/2008)
You guys suck at data. First you post that Toyota is going to sell 8.3 million cars this year as compared to 9.3 million last year. Of course you didn't mention (and frankly I bet you didn't know) that the 8.3 million figure was Toyota/Lexus/Scion (without Daihatsu and Hino) but the 9.3 million figure was all the brands, including Daihatsu and Hino (which account for 1+ million units).
Now you erroneously say that " GM China sold 11.5 million vehicles last year", when the fact ios that that is more likely the WHOLE automotive sector in China. GM (+ Wuling) sold about 1 million cars in China last year.
You need someone to check your stats, they suck.....
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Brn 11:05AM (10/24/2008)
That's the problem with blogs. Fact checking, hence journalistic integrity, goes out the window.
Too bad the rest of the media isn't far behind. Getting the story matters more than getting it right.
tekd 3:30AM (10/25/2008)
Not to mention their stats are all pretty outdated...for 2008 GM didn't actually experience any sales growth in China at all...they're going to be very lucky if they manage to keep the same amount of sales as last year-as it is it's a struggle to keep sales on par with last year. Toyota actually managed to overtake GM for Chinese sales by skyrocketing their sales by 30% this year, which is an impressive leap even if it weren't such a bad year for car sales.
And I can only imagine that GM really wishes it sold 11.5 million cars in China last year, they wouldn't have any problems if that were the case, lol.
BTW thanks for pointing out the Toyota numbers discrepancy. Toyota probably will still have sales volume slip a little overall, but it's not nearly as drastic sounding as the funky Autoblog stats made it seem.
On the bright side, even if GM's asia operations lose a bit of money they can probably still use them to bring money back over with loans and whatnot. Although, taking money from your moneymaking operations to sink into a pit of despair might not be the greatest long term strategy either.
Gabagool 9:32AM (10/24/2008)
""Come here, girl! Lemme holla at you for a minute!""--------WHAT?
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Stan Man 9:38AM (10/24/2008)
I don't care about the Cruze. I wan't to add the new Beat to my stable. The "Rick" needs to resign.
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carlbolt 9:45AM (10/24/2008)
GM sold 11.5 million cars in China? That must be 1.15 million.
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john 10:40AM (10/24/2008)
US will get the Cruze last because of Federal crash regulations. The European standards are different and the US car will have to pass the new roof crush test.
Lutz advocated suspended new safety regulations so that more European vehicles can come over here without going through the additional US testing which costs time and money.
But what does GM know about testing cars? Don't blame GM, blame the government
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Gabagool 10:58AM (10/24/2008)
Blame the government for having safety standards---great.
But this could be a good thing for GM, if this car will be sold elsewhere for a year, this will allow GM to find bugs and fix them and bring a quality vehicle to the biggest market.
paddy 10:52AM (10/24/2008)
The U.S. auto maker says it sold 1.05 million vehicles in China last year -- more vehicles than any other companies.
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why not the LS2LS7? 10:57AM (10/24/2008)
The Chinese auto market is unlikely to see 12% growth this year. The countries growth is projected to be in the single digits this year, and that was before companies started to close factories and lay off workers.
It isn't just the US and Europe that is seeing downturns. There's a ripple effect going on here, like the "Asian Contagion" of the 90s, only since it's the US and Europe affecting Asia instead of the reverse, the effects will be even bigger.
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paddy 11:22AM (10/24/2008)
In response to media questions, GM addressed repatriating foreign profits during last quarterly results conference call.
Repatriating foreign profits can result in stiff taxes; however, I believe recent Fed 'bailout' packages supports tax relief for such moves, to GM's benefit.
Foreign exchange plays into repatriation also.
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JW 12:07PM (10/24/2008)
Situations like this are 1 reason a future President should not punitively tax companies that "send jobs overseas".
GM has to build vehicles in China to sell them there. It's Chinese law. It's a huge market. "The One" would tax GM for "sending jobs overseas."
Even outside of China, you often have to build locally, due to currency fluctuations and to gain a political foothold. Punishing GM for building more Chevys in Korea, or Saabs in Sweden, only helps to weaken one of our larger manufacturing company's profitablity and therefore its support of the existing manufacturing and engineering jobs. Meanwhile, he'd give Toyota and Honda tax-breaks for things they already want to do, namely expand their presence here.
Who 'Dis? Who 'Dat? 11:30AM (10/24/2008)
" . . . GM is doing whatever it has to do to find money to stay in business."
Like of legends of folk lore, GM is becoming nothing more than a "corporate vampire" with it's attempts to bleed dry anyone or anything dry to stay afloat.
If the overall situation wasn't so pitiful, it'd be laughable.
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Cardude 12:32PM (10/24/2008)
Lol@GM. What else can you say or do at this point? GM=STUPID!
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Who 'Dis? Who 'Dat? 1:05PM (10/24/2008)
Aw, snaps! What I meant to say in my comments (second paragraph) was:
"Like of legends of folk lore, GM is becoming nothing more than a "corporate vampire" with it's attempts to bleed dry anyone or anything to stay afloat."
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