YANTAI: The world's leading automaker, General Motors Corp (GM), is seeking to take on South Korean Daewoo Motor Co's huge engines and spare parts projects in East China's Shandong Province to facilitate its vehicle production in China.
Phil Murtaugh, head of GM's China operation, out lined the bold vision yesterday after a deal was clinched to buy the Yandai Bodyshop Co from the Shandong Provincial Government.

The assets of the company, which used to assemble Daewoo's cars, will be split between GM, its Chinese partner Shanghai Automotive Industry Corp (SAIC) and their joint venture, Shanghai GM.

"We are currently working with the government... to find out if there is a feasible way to utilize the engines and parts (of the Daewoo projects in Shandong)," Murtaugh said.

In 1996, Daewoo and the Shandong provincial government invested 7.8 billion yuan (US$939 million) to build a joint venture project with an annual production capacity of 300,000 engines in Yantai.

The two sides agreed to export all of the engines to South Korea to supply Daewoo.

However, the project came to a standstill in 2000 when Daewoo was declared bankrupt.

To revitalize the project, the Shandong provincial government set up the Yantai Bodyshop Co to assemble Daewoo cars. But this company also stopped operation in default of a car production licence from the central government.

Shandong Province and Daewoo also have spare parts projects in Qingdao and Weihai.

These projects were not included in the joint buyout of Daewoo's assets by GM and SAIC in October.

Murtaugh said GM will introduce vehicles from its global portfolio, including those of Daewoo, to Yantai Bodyshop Co in the future.

According to an equity transfer agreement, GM, SAIC and Shanghai GM will pay 900 million yuan (US$108 million) to control 25, 25 and 50 per cent stakes in the Yantai company.

Chen Hong, president of Shanghai GM, said yesterday the joint venture will shift the production of its Sail compact cars to Yantai Bodyshop, which has an annual capacity of 100,000 units.

(chinadaily)