Foreign automakers have scaled back in the Asian nation as domestic players have taken greater control of the market
[DETROIT] General Motors (GM) is in preliminary talks to renew its longtime joint venture with China’s Saic Motor, signalling the US automaker’s budding optimism about its business in the world’s largest auto market after years of decline.
The two sides are exploring elements of a potential agreement, including which vehicle models and plants would be involved if a deal can be reached, according to sources familiar with the matter. The talks are at an early stage and final terms have not yet been agreed upon, said the sources, who asked not to be identified because the talks are private.
The effort to revive GM and Saic’s nearly 30-year-old partnership marks a change in sentiment from a year ago, when the two companies were cutting jobs as part of a US$5 billion restructuring.
Foreign automakers have scaled back in China as domestic players have taken greater control of the market. Carmakers such as Jeep-maker Stellantis have walked away from similar joint ventures with Chinese auto companies, raising questions about whether GM’s pact with Saic would dissolve in 2027, with the US company remaining in China as mostly an exporter of small, cheap models.
Saic did not respond to a request for comment. A GM spokesperson declined to comment. The US carmaker in January said that it planned to start talks to renew its venture with Saic.
China had been a massive profit centre for GM, at one point making US$2 billion a year in earnings. It was GM’s largest market for more than a decade, until a plunge in deliveries saw the US retake the top spot in 2023. More recently, the Detroit automaker was caught unprepared by a rapid transition to electric vehicles (EVs) that have left foreign brands playing catch-up to domestic producers such as BYD.
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GM now sees a chance to preserve its business in China that has recently shown signs of promise.
So far this year, the company reported US$116 million in profit, though those operations generate more than that because profit on exported vehicles are reported by the regions that sell them. GM lost US$4.4 billion in China in 2024.
GM’s China sales have grown through the first six months of this year, including a 20 per cent jump in the second quarter to 447,000 vehicles. A second venture with Saic and Wuling Motors Holdings has found success selling small EVs and exporting petrol-powered models, many of them to Mexico, where its low-priced Chevrolet models are finding buyers.
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Deliveries of brands such as Buick and Cadillac in China grew nearly 30 per cent in the first eight months of this year, while its lower-priced Wuling joint venture saw sales surge 37 per cent in the same period.
GM chief financial officer Paul Jacobson earlier this month said that the business can be a solid contributor going forward.
“Despite the fact that the China business isn’t what it used to be and likely never will be what it used to be, we are still profitable there and we are doing it with far more capital efficiency,” Jacobson at a Sep 16 investor conference.
Although improving, GM’s performance in the world’s largest auto market still faces challenges. China’s auto industry is going through an extended price war and dealing with excess manufacturing capacity that has idled factories that produce conventional petrol-fuelled vehicles.
To better compete in the price war, Saic cut sticker prices and introduced fixed pricing for new models from last year, such as for the refreshed Cadillac CT5 sedan, which starts from 206,900 yuan (S$37,213).
Previously, the Cadillac marque took a “high pricing, high discount” approach. The new strategy aligns more with the final transaction price, and reduces rivalry and discounts on the dealership level, according to Li Yanwei, an adviser to the China Automobile Dealers Association. BLOOMBERG
