Bankrupt General Motors Corp said its sales in China jumped 75 percent in May and it may raise its forecast for annual sales and build a new plant, as Asia-Pacific offers a stark contrast to its woes at home.
As part of its historic bankruptcy, the 100-year-old U.S. automaker plans to close or idle 14 U.S. plants and warehouse operations, shedding up to 20,000 workers there.
But in separate news conferences and statements across Asia, GM's local executives stressed that lower-cost Asia-Pacific operations would be part of the "New GM" that is expected to emerge leaner and with less debt within two to three months.
"We are safe. We are part of the new GM," Mark Reuss, head of Australian operation GM Holden, told reporters, adding no jobs would be cut in Australia, where GM employs more than 6,000.
In contrast to the overcapacity problems in North America, GM said it would need another factory in China within five years to meet its goal of selling 2 million cars in what has become the world's biggest auto market.
Kevin Wale, president of GM China, also said that if the "phenomenal" growth continued this month, GM may have to lift its target of expanding 2009 sales by up to 10 percent. Last month, sales surged 75 percent from a year earlier to 156,000 vehicles.
GM makes light commercial vehicles in China in a three-way tie-up with SAIC Motor and Liuzhou Wuling Automobile, and operates a separate car manufacturing venture in Shanghai with SAIC, China's largest automaker.
GM said a day earlier its Asia-Pacific operations were financially self-sufficient, needing no help from U.S. headquarters, although financing difficulties remained in some countries such as South Korea and Thailand.
Easing some of those concerns, the head of GM Daewoo Auto & Technology said on Tuesday the South Korean unit expected to reach an agreement on financial support with state-run Korea Development Bank (KDB), its biggest creditor, within the next two to three months.
GM Daewoo CEO Michael Grimaldi added the company planned to keep annual investment steady at around 1 trillion won ($811.5 million).
SUZUKI AT RISK, BUT TIES INTACT
Japanese small car maker Suzuki Motor Corp also stressed it would continue its relationship with GM, its former top shareholder which it relies on for help in developing hybrid, fuel-cell and other environmental technologies.
"I was relieved," CEO Osamu Suzuki told reporters, saying he had received the request to retain those ties directly from GM CEO Fritz Henderson by telephone on Monday.
Suzuki said, however, that it had exposure of around 72 billion yen ($746 million) to affiliates of GM -- more than half of that through a debt guarantee to the companies' Canadian joint venture plant, CAMI Automotive.
Suzuki will book loss reserves and revise earnings outlooks if needed, it said. Its shares were up 0.2 percent at 2,115 yen in early afternoon trade, underperforming Tokyo's transport sector subindex , which rose 2.2 percent.
VCCircle adds :
The Indian unit of General Motors Corp. said Monday it isn't included in a Chapter 11 bankruptcy protection filed by its U.S. parent and will continue its operations normally.
GM India will proceed with plans to introduce three new cars this year, including a minicar, and has no intention of cutting staff or stopping its expansion plans, the automaker said in a statement.