GM to Buy Back Stake From SAIC image

GM and Chinese partner SAIC Motor Corp reached an agreement according to which GM can buy back the 1% share of the joint venture the Detroit.

The 1% share was sold several years ago during the financial crisis. This agreement would bring the venture back to a 50-50 split for operations in China and would allow SAIC to retain a 51% share on the sales side of the business, keeping control of booking revenue for the joint venture, called Shanghai GM. This agreement still awaits regulatory approval from Chinese government officials.

In 2010, in a deal worked out the year before when GM was trying to avoid bankruptcy, GM had to sell 1% of Shanghai GM to SAIC for the sum of $85 million. In January 2012 GM declared that it hopes to buy back the 1% from SAIC, but nobody knows if an agreement had been made on how much the buy-back will cost GM.

SAIC is already in a 50-50 joint venture with Volkswagen AG, called Shanghai Volkswagen. In March 2012 Shanghai GM sold 113,047 units, up 11% from 2011, and Shanghai VW sold 106,678 units, up 14%. Overall car sales in China in 2011 climbed 5.2%, the slowest pace of growth since Beijing scrapped tax incentives for small cars.