Chinese automakers SAIC and Dongfeng are said to be considering acquiring the assets of General Motors and Chrysler , according to a report by China’s 21st Century Business Herald. The business newspaper cites a remark made over the weekend by a senior official at the Ministry of Industry and Information Technology — the regulator of China’s auto industry.
The top official said China’s auto industry has the means and the desire to acquire assets from GM and Chrysler . What that could ultimately lead to isn’t entirely clear. Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation are among the largest carmakers in China, but have little or no experience in the American auto industry.
One possible scenario involves a bankruptcy of either of the American companies, in which case assets — like brands, facilities, and technologies — would be sold off as a part of Chapter 7 liquidation proceedings.
Another possibility is the sale of certain brands to SAIC or Dongfeng as a means of raising cash for GM or Chrysler. Some analysts have floated the idea of GM selling Buick , which is very popular in China, to SAIC.
The final (and at this point least likely) scenario would involve some kind of complete takeover of GM or Chrysler by a Chinese automaker. This seems farfetched because the only way a company could quickly turn GM or Chrysler profitable would be to take production overseas — something that would be extremely costly and time consuming. It would be a long-term investment to say the least, and probably not something China is considering at this moment in time.
