Reuters Summit-GM in talks to allow SAIC access to UK network

(For other news from the Reuters China Investment Summit, click
on http://www.reuters.com/summit/ChinaInvestmentSummit10)

* In talks to give SAIC access to its UK sales network

* No plan to share sales network in North America

* Sees 10-15 pct growth of China auto market in 2011

* Expects GM to sell over 2.5 mln vehicles in China in 2011

By Fang Yan and Jane Lee

BEIJING/SHANGHAI, Dec 13 (BestGrowthStock) – General Motors (GM.N: ),
the largest overseas automaker in China, is considering giving
long-time Chinese partner SAIC Motor Corp (600104.SS: ) access to
GM’s sales network in the United Kingdom, a senior executive of
the U.S. firm said on Monday.

“We have agreed in an MOU that we would discuss the potential
for MG to be distributed in the UK,” Kevin Wale, president and
managing director for GM’s China operations, said at the Reuters
China Investment Summit.

“And that’s what we are doing at the moment.”

However, Wale said no discussions have been held on sharing
GM’s dealer network in North America.

The GM-SAIC partnership has long been hailed as the most
successful one in the Chinese auto industry. The Detroit
automaker sold more than 2 million vehicles in China, its largest
market, in the first 11 months, exceeding its full-year target.

GM is also the first foreign automaker to pass that 2
million-unit threshold in China.

GM’s Buick, Chevrolet and Cadillac models, made at its
flagship car venture with SAIC, also helped bolster the Chinese
automaker’s bottom line, making it a domestic champion.

The UK dealer network deal, if it is completed, would mark
another milestone in their 13-year relationship and would make
SAIC the only Chinese automaker to secure access to a partner’s
overseas dealer network.

SAIC became the owner of MG Rover’s 10,000-unit Longbridge
plant in Birmingham, central England, after a merger with its
much smaller peer, Nanjing Automobile Group, in late 2007.

The Chinese top Chinese automaker plans to start making MG
series sedan in the UK by the end of this year and sell them
across the European Union, its chairman Hu Maoyuan told Reuters
in January. [ID:nTOE60O02W]

Access to GM’s network there would be a big help for SAIC,
which has little exposure to the European market so far, industry
observers say.

SAIC had in November bought nearly a 1 percent stake in GM
when the top Detroit automaker returned to the stock market with
a more than $20 billion initial public offering.

CHINA MARKET

Beijing unveiled tax incentives in 2009 for cars with engine
sizes of 1.6 litres or smaller, a move that helped China surpass
the United States as the world’s largest auto market that year.

Selected fuel efficient models, including GM’s hot-selling
Chevrolet new Sail, are also eligible for a 3,000 yuan rebates.

As such, car sales in the country increased 35 percent in the
first 11 months, after a 53 gain in 2009, according to official
data.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic on comparison of U.S. and China auto sales

in 2009 and expected sales for 2010 and 2011:

http://link.reuters.com/tek79q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Beijing has made no announcement so far on whether to renew
the policies next year. But market consensus has been that the
policies would be scaled back significantly to say the least
along with its recently imposed monetary tightening steps.

Wale said he anticipated Beijing to keep 3,000-yuan rebates
for energy-saving models intact but to scrap the tax incentives.

Still, he expects the China market to continue to grow next
year, albeit at a more typical pattern, thanks to robust
underlying demand in the world’s most populous nation.

“I expect the market to continue to grow next year. Ten to
fifteen percent sounds reasonable to me,” said Wale, who has been
at the helm of GM’s China operations since May 2005.

“We always like to outpace it (the market) a little bit, so
we’ll sell an excess of 2.5 million units next year.”
(Editing by Ken Wills)

Reuters Summit-GM in talks to allow SAIC access to UK network