Bankrupt GM bullish on Asia; fundraising a priority
SHANGHAI/TOKYO (Reuters) - Bankrupt General Motors Corp said Chinese sales jumped 75 percent in May, but it warned further expansion in Asia-Pacific depended on the region's success in raising money in a difficult credit environment.
With its regional sales surging 44 percent to a record last month, GM is looking to invest more in countries such as China, India and Thailand, which executives said could all one day serve as export bases.
As part of the 100-year-old automaker's historic bankruptcy filed on Monday, the U.S. government is set to own 60 percent of a new and leaner GM, meaning its international operations are cut off from funds from the parent company.
"Life has changed in the last six months," GM Asia Pacific President Nick Reilly said on a conference call on Tuesday.
Reilly said that while China's cash-generating joint ventures could fund their own expansions, GM's Thai and Indian units were in urgent discussions to line up financing to complete projects that had been planned for some time.
In India, most of the $200 million needed to complete a new engine factory and other projects had yet to be raised, Reilly said. But GM was pursuing "two other potential sources of financing," he said, and expected no delays for the projects. He declined to elaborate.
In Thailand, GM said it hoped to conclude talks with local banks within 90 days on commercial loans for its $445 million new diesel engine and truck assembly plant project.
"We are quite optimistic about the progress of the talks," Steve Carlisle, GM chief executive for Thailand and South East Asia, told a news conference in Bangkok.
The project's construction had been suspended since late last year when the global financial crisis forced the Detroit headquarters to seek a bailout.
Easing some financing concerns also in South Korea, the head of GM Daewoo Auto & Technology said the unit expected an agreement on financial support from its biggest creditor, state-run Korea Development Bank (KDB), in two to three months.
CEO Michael Grimaldi added GM Daewoo planned to keep annual investment steady at around 1 trillion won ($811 million).
GM's European arm Opel will start receiving financing from Germany on Tuesday after clinching a deal with Canadian auto parts group Magna, GM and the U.S. and German governments on Saturday to shield Opel from the bankruptcy of its U.S. parent.
For a graphic showing GM operations worldwide, click:
DRIVER FOR "NEW GM"
Despite the financing hurdles, GM executives, in news conferences held separately across Asia, stressed that the lower-cost Asia-Pacific operations would be a crucial driver for the "New GM" that is expected to emerge in two to three months.
"We are safe. We are part of the new GM," said Mark Reuss, head of Australian operation GM Holden, adding that none of GM's 6,000 jobs in Australia would be cut.
In contrast to the overcapacity problems in North America -- GM plans to close or idle 14 U.S. plants and warehouse operations -- the automaker 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.
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 and fuel-cell 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 ended down 0.5 percent, underperforming Tokyo's transport sector subindex, which rose 1.2 percent.
Ratings agency Standard & Poor's said GM's bankruptcy filing would have only a limited direct impact on its ratings on Japanese automakers and parts suppliers.
(Additional reporting by Simon Rabinovitch in SHANGHAI, Vithoon Amorn in BANGKOK, Cheon Jong-woo in SEOUL, Sonali Paul in MELBOURNE, Nobuhiro Kubo in HAMAMATSU, Yumiko Nishitani in TOKYO, Janaki Krishnan in MUMBAI; Writing by Chang-Ran Kim; Editing by Lincoln Feast & Ian Geoghegan)
