GM to buy Suzuki stake in Canada venture, ending ties

Suzuki agreed to sell its entire 50 per cent stake in the venture, Cami Automotive Inc, to the Detroit-based car maker.

General Motors Co will take over its Canadian car making venture with Suzuki Motor Corp, in its second exit this year from a partnership with a Japanese automaker.

Suzuki agreed to sell its entire 50 per cent stake in the venture, Cami Automotive Inc, to the Detroit-based car maker, Suzuki said in a statement on Friday. The statement didn’t specify the terms of the transaction.

GM, under US government control, is selling assets after emerging from bankruptcy earlier this year. In June, the company abandoned its car production venture with Toyota Motor Corp in Fremont, California. GM ended an equity alliance with Suzuki in November 2008. Suzuki spokesman Hideki Taguchi declined to comment on the timing and the amount of the transaction.

“GM wants to make this plant one of its important production sites, as costs are cheaper in Canada than in the US,” said Koji Endo, managing director of Advanced Research Japan, a Tokyo-based equity research company. “For Suzuki it also makes sense as it probably needed to get out of production in the region, where it has very little market share.”

Suzuki had 0.2 market share in the US in November, according to data compiled by Bloomberg. Suzuki had halted production of the XL7 sport-utility vehicle at the end of May due to low demand for its vehicles.

GM plans to expand capacity at Cami by 40,000 vehicles annually, up from the current 200,000, the company said in a statement. The partnership’s plant in Ingersoll, Ontario, produces the Chevrolet Equinox and GMC Terrain.

Last month Cami said in a statement it would invest C$90 million ($85 million) and bring back 150 employees to meet increased demand for GM sport-utility vehicles. The joint venture had already called back more than 300 employees in October as GM started to add production after restructuring from Chapter 11 bankruptcy this year.

GM first invested in Suzuki in 1981 and held as much as 20 per cent of the Japanese car maker after doubling its stake in 2001. Suzuki completed a purchase of its own shares from GM last year. The venture has produced small cars and sport-utility vehicles since 1989.

Suzuki shares rose 4.7 per cent to 2,325 yen in Tokyo.