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Thursday, October 12, 2006

China Bites The Hand (GM)

Chinese state-owned car company, SAIC, will launch its own car brand in the next month. The company has been a joint-venture partner with GM and VW. The JVs will continue, but it looks like their future is clouded by their Chinese partner entering the market alone.

And, why should anyone believe that the state owned auto company will not begin to take share from its foreign partners. It has learned a great deal from GM and VW about the manufacturing and quality control process. And, it can learn these lessons to take share from the JVs.

China is a critical market for companies like GM, Ford, and VW. With little or no unit sales growth in their home markets, the world's most populated country may be their only significant chance for sales growth. That is, unless, the locals use home field advantage.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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