BEIJING—General Motors Co. said it plans to increase its stake in the Wuling microvan joint venture it owns with Chinese partner SAIC Motor Corp. to 44%, part of efforts to integrate the Chinese operation more into the U.S. company's global operation.
The Detroit auto maker, which is gearing up for its $10.6 billion initial public offering of stock later this month, said in a U.S. regulatory filing it has entered into an agreement to purchase an additional 10% interest in SAIC GM Wuling Automobile Co. for $51 million in cash from a third joint-venture partner, Wuling Group. GM said it also agreed to provide technical services to Wuling Group through 2013. The transaction is subject to regulatory approval in China.
GM has been negotiating since 2008 with SAIC and Wuling Group to take a bigger stake in the joint venture, which is based in the southern Chinese province of Guangxi. According to people close to GM, the move is aimed at integrating the Wuling venture, which GM wants to use as a launching pad for low-cost cars in other fast-growing emerging markets.
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"We have been [saying] for a long time that we are an interested party to buy additional shares" in the Wuling venture, a spokesman for GM said Thursday. He declined to elaborate.
The U.S. auto maker said that after the transaction is completed, Wuling Group's share of the venture will fall to 6%, while SAIC's stake will stay at 50%.
The latest move follows the creation last year of a 50-50 joint investment company by GM and SAIC to, among other things, take Wuling microvans into India.
The two companies have since set up a joint-venture unit to produce and market Wuling vehicles in India, as part of an effort to boost the competitiveness of GM's business there.
Analysts say GM likely couldn't expand effectively in emerging markets such as India without SAIC's help.
Most of GM's product offerings, from gas-guzzling big pickup trucks to subcompacts, are generally too pricey for buyers looking for low-cost, no-frills cars in emerging markets. Boxy Wuling microcars, priced around $4,000, are more suitable for India and other similar markets, they say.
