GM may join forces with China's SAIC in SE Asia

General Motors Co's new China chief downplayed concerns over the health of its relationship with Chinese partner SAIC Motor Corp, insisting they are growing closer as they look to use their business model in Southeast Asia to tap demand for no-frills cars.

Bob Socia - GM's chief since Oct 1 in the world's biggest car market - said SAIC's low-cost vehicle technology was important to the American's firm's push into emerging markets.

File photo of a laborer reflected in the glass of a Shanghai General Motors exhibition hall in Shanghai. [Photo/Agencies]

SAIC's technology for producing cars priced as low as 30,000 yuan ($4,800) is especially critical to GM's effort to come up with decent cars with a price tag acceptable to rising middle-class buyers in markets like China, India, and Indonesia.

"Products we're producing out of our joint-venture operations with SAIC serve up very well in emerging countries," Socia, who is also GM's head of operations in India and Southeast Asia, said in a recent interview in Shanghai. In China, he replaced Kevin Wale, who retired.

SAIC, China's biggest carmaker, became a 50-percent partner in GM's India operations in 2010. It nearly reversed that in October by cutting the stake to 9 percent, a move widely seen as a possible chill in the relationship.

It came as GM's sales in India fell 21 percent in the first half of the fiscal year that began in April. GM and SAIC also struggled to convert two low-cost small cars they sell in China into right-hand-drive models for India, delaying key products.

Socia and other GM executives who spoke with Reuters in Shanghai late last week would not offer specific reasons for SAIC's decision.

But they said the Shanghai-based State-owned automotive group will continue to help GM develop "value cars" for India and other emerging markets, although SAIC on Wednesday announced plans to start making cars in Thailand with local firm CP Group Co Ltd. GM is not involved in that deal.

"They (SAIC) are very active in strategic issues of the organization; we have taken over operating control," the 58-year-old executive said of their India operations.

"I wouldn't read too much into the equity share thing; we're working very well and we will continue to work very well (with one another)."

A SAIC spokeswoman declined to comment.

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