The China unit of automaker General Motors Co (GM) continues to expand despite the woes of its parent, which this week filed for bankruptcy, with new joint venture plans still on, an executive said yesterday.
GM’s China business is self-sustaining and does not require financing from the struggling parent company in the US, GM China president Kevin Wale told reporters.
He said the firm was maintaining its goal of doubling sales to more than 2 million units annually over the next five years and will “probably need to build another plant in the next five years.”
PHOTO: AP
The once-mighty GM filed for bankruptcy in New York on Monday in a bid to wipe out massive debts piled up over the past decade.
But Wale said the China arm was still in talks with local firm First Automotive Works (FAW, 第一汽車集團) to set up a commercial vehicle joint venture.
“On FAW, we have said previously we are working closely with them on the commercial vehicle project,” he said.
“We are still working through the agreements with them … We are moving forward in a positive manner,” he said.
He said GM sales in China jumped 75 percent last month from a year earlier to another record monthly high of 156,000 units, mainly boosted by strong sales of minivans eligible for government subsidies.
Its sales in China, which was the largest auto market in the world from January to last month, grew 33.8 percent during the five months from the same period a year ago to more than 670,000 units, the company said.
Meanwhile, the Southeast Asian arm of bankrupt GM was still hoping to expand its manufacturing base in Thailand even as it forecasts vehicle production to plunge nearly two-thirds this year.
The regional business is confident of securing loans from Thai banks, general manager of Southeast Asia Steve Carlisle said yesterday.
Carlisle told a press conference in Bangkok, one of several held in Asia yesterday as GM businesses swung into damage control mode, that being self-sufficient was a major challenge facing the Thai and regional operations.
Thailand is a major production and export base in Asia for Japanese and other auto companies. Hit by the global slowdown, Carlisle estimated that total auto exports from Thailand had fallen between 40 percent and 50 percent so far this year. The drop in GM’s Thai exports was in line with the industry’s decline, he said.
The bad news about the GM, already in financial trouble before the global recession hit auto sales, had also made business more difficult. It hit GM’s reputation in the region, making consumers leery about buying its models, though the situation was now stabilizing, Carlisle said.
“This is a difficult year for everyone so it’s tough from a cash flow point of view,” he told reporters.
The company, which makes one-ton pickup trucks and passenger cars at its Thai plant, forecasts the factory’s production this year to slump 62 percent to 40,000 units from 104,000 last year. Its share of vehicle sales in Thailand has been steady at about 3.5 percent.
Despite these problems, regional GM executives are insisting that a US$445 million plan to build a diesel engine plant in Thailand and upgrade its existing factory in the eastern seaboard province of Rayong, remains viable.
The chances of getting loans to help fund the project are “quite high” especially as Thai banks are flush with liquidity, Carlisle said. “We have been getting good feedback” from lenders about the business plans, he said.
In Malaysia, GM said its sales so far this year were down 30 percent. Sales in the Philippines had plunged about 40 percent but Indonesian sales had grown.
In Australia, GM’s subsidiary, Holden Ltd, said it would be unaffected by GM’s filing for bankruptcy and would continue borrowing from the parent company.
The Australian arm of GM has posted no job losses despite the downturn, Holden chairman and General Manager Mark Reuss said yesterday. And none of the 6,000 Holden jobs in Australia would be lost in the foreseeable future, Reuss said.
“We have worked over the last 18 months and taken all the necessary steps in the global financial crisis to make sure Holden here in Australia is cash-flow positive, is viable and has a great revenue stream set up here for our new products that we’re beginning to introduce,” Reuss told Nine Network television.
“We’re very well positioned here for any upswing in the economy and in fact, I think you’ll see this last month we’ve had start to have a little bit of rebound on local demand,” he said. “We’re in a good place.”
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