GM Forms Partnership With SAIC And Wuling To Produce Mini-Vehicles

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News of June 12, 2002

GM Forms Partnership With SAIC And Wuling To Produce Mini-Vehicles

Nanning, People's Republic of China - General Motors China, Shanghai Automotive Industry (Group) Corporation (SAIC) and Liuzhou Wuling Automotive Company, Ltd. (Wuling Automotive) announced the formation of a three-way partnership to manufacture mini-vehicles.

GM is investing more than $30 million for a 34-percent stake in SAIC-Wuling Automotive Co. Ltd. (SAIC-Wuling), currently a partnership between SAIC and Wuling Automotive based in Liuzhou, Guangxi. This represents the largest foreign investment ever in the western China province. In the new partnership, SAIC will hold 50.1 percent and Wuling Automotive the remaining 15.9 percent. The new partnership, tentatively named as SAIC-GM-Wuling Automotive Stock Limited Company, has a total investment of approximately $100 million.

"The new relationship serves as a significant extension of our partnership with SAIC and our long-term growth strategy in China," said Philip Murtaugh, Chairman and CEO of the GM China Group. "It will help us to expand our product portfolio to meet the diverse needs of Chinese vehicle buyers. At the same time, it will enable us to participate in one of China's fastest-growing market segments."

Last year, about 700,000 mini-vehicles were sold in China, accounting for nearly 30 percent of total vehicle sales volume and China's largest vehicle segment.

"GM is contributing our financial resources, management expertise, manufacturing processes and advanced products," Mr. Murtaugh added. "We will be assisted by the Pan Asia Technical Automotive Center (PATAC), our engineering and design center joint venture with SAIC, to help upgrade existing products and develop new vehicles. By utilizing our full range of resources, our goal is to ensure the long-term success of our new venture to the benefit of all stakeholders."

According to SAIC President Hu Maoyuan, the formation of the three-way partnership is consistent with the Chinese government's intention of consolidating the nation's automotive industry into a small group of strong companies to meet the challenge of an increasingly competitive market. In July 2001, SAIC became the largest stakeholder in a major subsidiary of Wuling Automotive, forming SAIC-Wuling and laying the foundation for the three-way partnership.

"Over the past eight years, SAIC has become one of China's largest automotive groups by cooperating closely with both domestic and foreign partners," said Mr. Hu. "The new partnership will enable the three parties to leverage their expertise and resources to increase the overall competitiveness of the venture. By bringing in our extensive market development capabilities and strong distribution network, we have laid a solid foundation for the further development of our partnership."

He Shiji, Party Secretary of Wuling Automotive, said: "Today's agreement marks a milestone in our company's history. The participation of GM and SAIC is critical to strengthening SAIC-Wuling's position in the highly competitive mini-vehicle market and sustaining its overall development. We expect our venture to contribute to the economic growth of Guangxi province, which is in line with the Chinese government's 'Go West' development strategy."

China's eighth largest automaker, SAIC-Wuling is a leading domestic mini-vehicle producer. In 2001, it manufactured more than 120,000 mini-trucks and minivans.

(June 4, 2002)

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