GM Looking to Buy Chinese Car Makers

by Christopher Freeburn | February 6, 2013 10:22 am

GM Looking to Buy Chinese Car Makers

GGeneral Motors1 300x199 GM Looking to Buy Chinese Car Makers[1]eneral Motors (NYSE:GM[2]) is looking to grow its sales in China by 75% over the next two years and will seek the acquisition of struggling Chinese automakers to fuel that growth[3], unnamed insiders told Bloomberg.

Already, the leading foreign car-maker in China, GM is hoping to sell about 5 million vehicles in China by 2015. The company has $23 billion in cash that could be used to fund acquisitions.

As a foreign company operating in China, GM must comply with a number of regulatory restrictions. Those include a limit on the size of its stake in Chinese factories and the extent of its partnerships with Chinese companies.

There are 71 auto-making companies in China, but 10 of them failed to sell any cars or trucks in 2012. Obtaining government approval for the purchase of a failing company would be easier than convincing Chinese regulators to allow GM to expand its existing Chinese factories or partnerships.

Other automakers are also looking to build their presence in China, including Volkswagen (PINK:VLKAY[4]), Ford (NYSE:F[5]), Fiat’s (PINK:FIATY[6]) Chrysler, Nissan (PINK:NSANY[7]) and Hyundai.

A GM spokesperson told Bloomberg that the company had no current plans to boost its production capacity in China through acquisitions.

Shares of GM slipped more than 1% in Wednesday morning trading.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/General-Motors1.jpg
  2. GM: http://studio-5.financialcontent.com/investplace/quote?Symbol=GM
  3. seek the acquisition of struggling Chinese automakers to fuel that growth: http://www.bloomberg.com/news/2013-02-05/gm-said-to-seek-deals-in-china-to-reach-5-million-goal.html
  4. VLKAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=VLKAY
  5. F: http://studio-5.financialcontent.com/investplace/quote?Symbol=F
  6. FIATY: http://studio-5.financialcontent.com/investplace/quote?Symbol=FIATY
  7. NSANY: http://studio-5.financialcontent.com/investplace/quote?Symbol=NSANY

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