GM-SAIC Join Forces in Southeast Asia image

GM’s new China chief expressed his concerns regarding the automaker’s plan to join forces with Chinese partner SAIC in Southeast Asia.

GM’s new China chief, Bob Socia, who was named on October 1st, said that SAIC’s low-cost vehicle technology is of utmost importance for GM’s push into emerging markets. He added that SAIC’s technology for manufacturing cars priced as low as $4,800 is especially critical to GM’s plan to develop decent cars with an acceptable price for the rising middle-class buyers in markets like China, Indonesia and India.

“Products we’re producing out of our joint-venture operations with SAIC serve up very well in emerging countries,” said Socia, who is also GM’s head of operations in India and Southeast Asia.

The two companies became partners in 2010, with SAIC owning 50% of GM’s India operations. In October this stake was cut to 9%, a clear sign that the relationship was chilling. GM and SAIC delayed key products as they tried to convert two low-cost small cars they sell in China into right-hand-drive models for India.

GM tries to expand in Southeast Asia, a difficult task taking into consideration that this market is 90% dominated by Japanese automakers. Therefore GM needs SAIC to manufacture no-frills cars for this market and GM even plans to reopen a plant near Jakarta, which it closed down in the mid-2000s.