| GM's bankruptcy threatens Asia's growth plans | |
| Bloomberg / Seoul June 03, 2009, 0:55 IST | |
General Motors Corp’s bankruptcy rippled across Asia on Tuesday as the company’s South Korean unit said fresh loans from a state-owned bank were the “highest priority” and former affiliate Suzuki Motor Corp said it may not recover $305 million in outstanding debt.
GM lacks $200 million to complete an engine factory in India, Asia-Pacific President Nick Reilly told reporters. The company may also cancel a planned $440 million diesel engine plant in Thailand if it can’t win bank loans.
Honda Motor Co and Nissan Motor Co gained on investor expectations the carmakers would win sales at the expense of GM. The Detroit-based carmaker became the largest manufacturer to go bankrupt as it turned to the US government for $50 billion in loans to fund a reorganization.
“For Japanese automakers, GM’s collapse presents a huge opportunity to take market share,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co in Tokyo. “All the bad news on GM is out, and that’s a relief to the market.”
Suzuki, formerly a GM affiliate, said it may not be able to collect ¥29.4 billion in outstanding loans and accounts receivables owed by GM subsidiaries because of the bankruptcy filing. The company will set aside money to cover potential losses, it said in a statement.
Suzuki fell 0.5 per cent to ¥2,100 at the close of trading in Tokyo. Honda gained 2.2 per cent and Nissan rose 1.7 per cent.
GM plans to launch a new company in 60 to 90 days, armed with vehicles from its Cadillac, Chevrolet, Buick and GMC units for the US market. The US government plans to convert loans into a 60 per cent stake in the reorganized company, according to a filing in US Bankruptcy Court in New York.
GM, the largest overseas automaker in China, did not include its international operations in a filing for bankruptcy protection on Monday in New York. The carmaker’s units in the region will become part of the new company.
The automaker’s South Korean unit, GM Daewoo Auto & Technology Co, said it aimed to win funding from state-run Korea Development Bank within the next 60 to 90 days. GM Daewoo will continue to lead GM’s small-car development, Chief Executive Officer Michael Grimaldi said.
GM is having difficulty finding funds to complete an engine factory in India, said GM’s Reilly. The company is in talks with two possible financiers for the plant, part of a strategy to export cars from the country.
GM’s plans to keep investments in Asia contrast to Europe, where the company is giving up its Opel unit in Germany. The German government named Magna International Inc, a Canadian car-parts maker, as preferred buyer for Opel.
SAIC Motor Corp, GM’s biggest China partner, said it was confident their Shanghai-based venture will develop in a “healthy, stable manner” and said shareholders’ rights, as well as the assets, brands and technology of the venture will be part of the new GM.
GM’s sales in China in the first five months of the year rose 33.8 per cent from a year earlier, the statement said, without providing a figure. The company’s sales rose 50 per cent in April to a monthly record of 151,084 units. The carmaker aims to double sales in China to an annual 2 million vehicles within five years, GM China president Wale said on Tuesday.
The company’s operations in the Asia Pacific region had “unprecedented” growth in the first quarter of the year, Steve Carlisle, President of GM’s Southeast Asia operations said on Tuesday, without providing sales details.
GM’s Australian unit, GM Holden Ltd, expects to be part of the new GM and will not cut jobs, the unit’s managing director Mark Reuss said on Tuesday.
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