GM scraps purchase plan
( 2003-06-04 08:56) (1)
US auto giant General Motors Corp (GM) said Tuesday it has abandoned an acquisition of South Korean Daewoo Motor's huge engine and spare-parts projects in East China's Shandong Province.
"We have halted negotiations with Daewoo Motor's credit banks and the Shandong provincial government to acquire the project,'' GM China Group spokeswoman Daphne Zheng told China Daily.
But she failed to reveal why the negotiations stopped.
GM started talks with Daewoo credit banks and the Shandong provincial government on co-operation in the projects during the second half of last year, she said.
In the mid-1990s, Daewoo Motor and the provincial government launched two joint ventures with a total investment of 7.8 billion yuan (US$940 million) to produce engines and spare parts in Yantai and Weihai, two coastal cities in Shandong.
However, the two joint ventures came to a standstill in 2000 because of Daewoo Motor's bankruptcy.
None of the South Korean carmaker's businesses in China, including the projects, were part of a joint buyout of Daewoo Motor's assets made by GM, Japan's Suzuki, China's Shanghai Automotive Industry Corp (SAIC) and Daewoo's creditor banks last October.
Analysts say the projects could facilitate GM's fast-growing vehicle production in China, especially that of a plant in Yantai controlled by the US auto giant, SAIC and their joint venture -- Shanghai GM -- last December, if the US auto giant succeeded in acquiring them.
GM, SAIC and Shanghai GM paid 900 million yuan (US$108 million) to have a 25, 25 and 50 per cent stake in the Yantai plant respectively.
Shanghai GM has shifted production of its Buick Sail compact cars from Shanghai to the plant, previously named Yantai Bodyshop Co which manufactured Daewoo vehicles.
Shanghai GM's plant in Shanghai now manufactures the Buick Regal and Excelle sedans and commercial wagons.
"GM will continue to seek more co-operation opportunities with local partners to further boost our businesses in China, (although the talks on the Daewoo projects have halted,)'' Zheng said.
GM has signed a letter of intent with SAIC and Japan's Isuzu to form a joint venture to produce heavy-duty trucks in Shanghai.
GM also has two joint venture plants in Northeast China's Liaoning Province and South China's Guangxi Zhuang Automotive Region which are producing sport utility vehicles and mini automobiles respectively.
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