Shanghai automotive Industry Corp yesterday denied it is considering buying General Motors Corp after it and China's Dongfeng Motor Corp were reported to be potential buyers of GM, the world's biggest car maker that is struggling to avoid running out of cash, by controlling its major shareholder.
Hu Xindong, a spokesman of Hong Kong-listed Dongfeng, declined to comment yesterday. But he earlier said the nation's third biggest car maker has been contacted by financial groups which have close relationships with GM over a possible takeover, according to National Business Daily.
"But the managing board has not officially considered the option yet," the paper added, citing Hu.
Although Chinese car makers are eager to expand overseas, some analysts said they are still not financially capable to buy GM.
"There is no Chinese car maker that is strong enough to buy General Motors," said Wang Liusheng, an auto analyst at China Merchants Securities Co. "Besides liquidity constraints, it is also impossible for Chinese car makers to handle GM's huge costs of compensating workers and any other follow-up expenditure," he said.
But other analyst also said there could be opportunities for Chinese car makers to buy some assets, especially in technological areas, from GM.
The big three car makers in the United States, including Ford Motor Corp and Chrysler LLC, have been seeking a US$25-billion government loan after their stock prices tumbled and vehicle sales plunged amid the financial crisis, driving them to near bankruptcy.
GM has announced plans to sell some of its brands, such as Hummer, Saab and Pontiac, and cut costs as part of its rescue plan to win support for the government bailout. Ford is also reviewing the sale of its Volvo brand.
The US Congress will vote on the auto bailout plan next week.
(Shanghai Daily December 3, 2008)
