Report Says GM Shopping For-Sale Assets in China; GM Denies It

Dongfeng Motor Group Co., China's third-largest automaker, said it had received proposals from investment banks to buy assets from General Motors as the carmaker tries to generate desperately needed cash, Bloomberg News reported Wednesday.

A spokesman for Dongfeng, which partners in China with Nissan, Honda and PSA Peugeot Citroen, said it had received e-mails and investment materials asking if the company would be interested in buying some of GM's assets. The spokesman, who wouldn't reveal the investment banks it was talking with or the assets offered for purchase, told Bloomberg it hasn't reviewed the materials and has not responded to GM.

A GM spokesman based in Shanghai denied the report, saying there were no grounds to the rumors.

Still, it comes as no surprise that GM would go to foreign companies, especially those in emerging markets like China, to offer its wares. GM has assets to sell and the Chinese have access to cash. And Ford was successful in selling off its distressed assets of Land Rover and Jaguar to India's Tata Motors.

GM has put a number of assets up for sale including Hummer and AC Delco. So far, GM has found no takers. A deal to sell its medium-duty commercial truck business to Navistar fell apart as the economy worsened. Further, in its viability plan submitted to Congress on Tuesday, GM said it was considering "options" for Saab and Saturn as well. Saab could be sold; Saturn likely would be dismantled or its vehicles folded into other GM divisions.

Chinese companies are likely targets as buyers for GM's assets since they have access to capital and ambitious global expansion plans with sites set on North America in particular. A Shanghai analyst told Bloomberg capital for overseas investment is not a problem for Chinese companies, though other possible risks include issues regarding local legal regulations and labor unions.

More than likely, GM also has talked to its own Chinese partner, SAIC Corp., China's largest automaker. SAIC already has expanded into Europe with the purchase of design rights to MG Rover and South Korea with its stake in Ssangyong Motor Co.

And interestingly, the Chinese government in November opened a consulate office in the Detroit suburbs of Troy, Michigan, the home to SAIC's offices.