General Motors Co. Chief Executive Frederick "Fritz" Henderson,
on his first trip to China since GM emerged from bankruptcy
protection, expressed confidence Tuesday that GM will be able to
unload its Hummer and Opel brands soon.
It is "quite possible" the company will finalize the sale of a
majority stake in its Adam Opel GmbH unit this week, Henderson
said.
In addition, the buyer of its Hummer truck brand, Sichuan
Tengzhong Heavy Industrial Machinery Co., is "confident and
hopeful" that the deal, signed on Friday, will receive approval
from Chinese government, he said.
"The work has been done between GM and Magna," said Henderson.
"It's quite possible that you'll see documents signed this
week."
GM said last month it would sell its Opel unit, as well as
sister brand Vauxhall, to Austrian-Canadian car-parts maker Magna
International Inc. (MGA) and Russian bank OAO Sberbank
(SBER.RS).
Terms of Tengzhong's deal for Hummer haven't been disclosed but
several people familiar with the matter have said Tengzhong will
pay $150 million for Hummer. In bankruptcy filings, GM estimated
the value of the brand, known for its gas-guzzling vehicles, at
$500 million.
Henderson declined to confirm the $150 million figure Tuesday.
He said GM is satisfied with its "well-negotiated" agreement with
Tengzhong.
The massive SUVs hardly fit with China's strategy to improve
energy efficiency, and Chinese regulators will also likely consider
whether the Hummer brand can become profitable before approving the
deal. GM missed a Sept. 30 goal of finalizing a deal to sell Hummer
to the Chinese manufacturer.
"We have been in dialogue with Tengzhong on where they stand on
that. It's their responsibility as the buyer" to seek regulatory
approval from China, Henderson said. "They certainly feel strongly
that this project should receive approval."
Even if the deals go through quickly, the U.S. auto maker is
falling short on other goals. After buyout programs fell short it
has about 10,000 more workers now than it had planned to have by
the end of this year. A plan to sell Saturn to Penske Automotive
Group (PAG) fell through after Penske failed to find a company to
build the vehicles once GM stops making them.
China, on track to overtake the U.S. as the world's largest auto
market this year, plays an increasingly important role in GM's
global operations, Henderson said. GM executives have repeatedly
extolled China's significance but haven't quantified how much of
the company's revenue now comes from the country.
GM's sales in the January-September period in China totaled 1.29
million units, up 55.6% from a year earlier. GM said in early
September it expected its sales in China to grow by more than 40%
this year.
Auto makers in China have benefitted from the country's
relatively more buoyant economy as well as government incentives
aimed at boosting vehicle sales.
China's passenger vehicle sales in September rose 84% from a
year earlier to 1.02 million units, the China Association of
Automobile Manufacturers said Tuesday. Total vehicle sales during
the January-September period rose 34% from a year earlier to 9.66
million units. The association expects overall auto sales for the
whole year to exceed 12 million.
Henderson said he expects China's auto market to continue to
grow at a "significant pace," and the strong auto sales in the
country so far this year are "not a blip."
To boost sales, GM will introduce more than 30 all-new or
refreshed products over the next five years. Henderson said Tuesday
GM plans to launch a new Chevrolet Sail by the Lunar New Year,
designed and developed primarily by the Pan-Asia Technical
Automotive Center Co., or Patac, an automotive design and
development joint venture between GM and SAIC Motor Corp.
(600104.SH) in Shanghai. The Lunar New Year holiday will start Feb.
14.
"New Sail has been developed for customers in China and has
great potential for other customers in emerging markets," he
said.
Henderson didn't specify whether GM is considering exporting the
compact car. GM said in August that its venture with Chinese
partners SAIC and Wuling Automobile Co. will expand exports of two
micro-minivans designed and produced in China, apparently part of a
wider strategy to use China as an export hub.
Other auto makers have come up with small no-frills cars
targeted at emerging markets. GM's Sail follows such cars as Ford
Motor Co.'s (F) recently unveiled Figo, to be made in India and
exported to South Africa and other countries, as well as Renault
SA's (RNO.FR) low-cost Dacia models.
As sales volume in China grows, GM also sees the country playing
a more central role in research and development in areas such as
alternative energy.
"Patac's capability in design and development of cars has grown
substantially over the last few years," said Nick Reilly, GM's head
of international operations. "My belief is that China will probably
be the country that enforces or develops electric vehicles, small
electric cars faster than anywhere else in the world because of the
demand for those in the cities and the desire of the government to
produce those types of vehicles."
Earlier this year, GM announced it is basing all its
international operations in Shanghai.
"Shanghai and China will become a very important source of
technology that will be used elsewhere in the world," Reilly said
at the news conference.
GM has launched two hybrids in China, the Buick LaCrosse
Eco-Hybrid and the Cadillac Escalade 2-Mode Hybrid, and will
introduce the Chevrolet Volt in China in 2011.
Henderson also said GM plans to conduct an initial public
offering in the second half next year. The timetable represents a
slight delay from his earlier forecast, during an interview on CNBC
in August, for the IPO to likely take place after the first quarter
of 2010..
The company needs to prepare performance targets and financial
statements for the IPO, he said.
"That process we think will take through the first half of next
year."
-By Patricia Jiayi Ho, Dow Jones Newswires; (8610) 6588 5848;
patricia.ho@dowjones.com