Recently, it was reported that General Motors would purchase the entire equity of SAIC-GM-Wuling, a joint venture company, from Liuzhou Wuling. The Nanfang Daily reporter made multiple confirmations and failed to confirm the rumor. However, SAIC-GM-Wuling has been driven by local interests after its strong micro-vehicle. How to accelerate the development of the mainstream passenger car market in the future is a focus topic in the industry.
All parties are reluctant to comment
According to the report, General Manager Gan Wenwei visited Guangxi and had several rounds of consultations with the Guangxi Autonomous Regional Government and Liuzhou Wuling on equity transfer issues. The two parties have already reached a preliminary agreement on Wuling’s equity transfer: that is, the introduction of car products by General Motors in Guangxi. Put into production, and Wuling Group's holding of the shares of SAIC-GM-Wuling is sold at a "low price" to GM.
At present, GM holds a 34.1% stake in SAIC-GM-Wuling, and Liuzhou Wuling holds 15.9%. The largest shareholder is SAIC Motor. If GM fully purchases Wuling shares, it means that Guangxi has completely withdrawn from the joint venture company, and Wuling’s more recent three-party joint venture structure will be changed.
The person in charge of Liuzhou Wuling Public Relations Department refused to comment on the matter. The person told the Nanfang Daily reporter that he had just seen the news on the Internet. He still did not have any opinion and he could not give any specific information. SAIC-GM-Wuling said that it was “uninformed†about the matter and that the matter concerning the equity should be asked about the shareholders.
The reporter noted that Gan Wenwei recently expressed satisfaction with the current shareholding in SAIC-GM-Wuling in an interview with the media. However, he disclosed that “Luo Ruili (President of General International Division) said several times, if there is an opportunity to allow us to expand stocks, why don’t we? But back to reality, there is no such opportunity now, so we’re right now. The ownership structure is satisfactory."
This answer shows that GM has not made progress in seeking to increase shares. In October last year, General Motors chief operating officer disclosed for the first time that General Motors plans to increase its stake in SAIC-GM-Wuling. General Motors said at the time that it was satisfied with the current ownership structure and cooperation of the three parties.
Car commentator Zhang Zhiyong believes that GM currently does not have much capacity to do a second joint venture. There are problems in the sources of funds, investment, and product introduction.
Wuling or will build its own car
Another main line behind the equity dispute is that Guangxi and SAIC-GM-Wuling hope to accelerate the development of the mainstream passenger vehicle market and plan to launch mid-range sedan products.
In mid-July, Ma Rong, chairman of the Guangxi Autonomous Region, met with Gan Wenwei and stated that at the end of last year, SAIC-GM-Wuling's rolling development plan for 2008-2012 had been confirmed by the tripartite parties. He hoped that General Motors would further strengthen cooperation with Guangxi and related parties and organize the implementation of SAIC as soon as possible. The GM Wuling Development Plan "accelerates the development of a series of medium-sized cars."
This report shows that the further development of sedan products has been incorporated into the short-term plan of SAIC-GM-Wuling. On July 23, the second phase of the SAIC-GM-Wuling factory reconstruction project and the Liuzhou engine factory's second phase project, which had a total investment of 2.1 billion yuan, was started in Liuzhou City. According to the plan, after the eastern plant transformation project is completed and put into production, the production capacity will be increased to 300,000. "And can produce cars and commercial vehicles at the same line."
The logic of the above-mentioned rumors is precisely that General Motors GM Wuling has introduced mid-size car products as a condition of Liuzhou Wuling's complete exit.
However, car commentator Zhang Zhiyong questioned this. He believes that Guangxi's development of cars may not necessarily involve the introduction of generic products. "It is entirely possible to develop their own brands. This is a better development route. Wuling is not currently without technology." Zhang Zhiyong also believes that Wuling also has many options in joint ventures for new projects, and it is not necessary to choose GM. Gan Wenwei had previously stated to this: “The SAIC-GM-Wuling’s production of sedan is a historical issue. There is no way to answer it now.â€
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