One of China's top automakers is considering buying a stake in the company from the U.S. government.  (Source: AP Photo)

The U.S. government is currently the majority owner of General Motors, America's largest automaker.  (Source: AP Photo)
GM is seeing red

A recent Dodge Chrysler commercial boldly proclaims, "Here's a couple of things America got right -- cars and freedom."

China's third largest automaker apparently agrees with the former assertion.  Shanghai Automotive Industry Corporation Chairman Hu Maoyuan on Monday said that his company was considering buying a stake in U.S. automaker General Motors (GM) if "conditions are favorable".

GM, like Chrysler, is currently recovering from bankruptcy.  It has posted encouraging financials despite having lost yet another chief executive.  It now awaits a key step in its recovery process -- a major divestment of the U.S. government's stake in the company via an initial public offering.

The company's return to profitability has come largely thanks to its offloading of laggard brands.  One of those GM brands -- Hummer -- sold to one of SAIC's Chinese rivals, Shanghai Automotive Industry Corporation (though the deal has since stalled).

SAIC CEO Hu comments, "GM is our important strategic partner.  We are not clear about the details of its IPO. We will make the right decision once we know details."

An investment would not be surprising, but would be a reversal of the pair's long-term relationship.  Today, thanks to a series of mergers and acquisitions, SAIC produces 2.72m vehicles a year, but it has long played the role of GM's smaller ally in China.  

The pair launched two joint ventures -- Shanghai GM (1997) and SAIC-GM-Wuling Automobile (2002).  SAIC helped GM become China's second highest selling foreign automaker, behind only Volkswagen.

Earlier this year, SAIC acquired a 1 percent additional stake in Shanghai GM, making it the majority owner of the company, a key business position.

While the Chinese automaker seems open to the idea of an investment in America's largest automaker, the French/Japanese auto alliance Renault SA-Nissan Motor Co. quickly dismissed speculation that it was interested in GM stock.  Carlos Ghosn, head of the alliance speaking at a plant opening in Zhengzhou, central China, said his companies had no interest in investing in GM.

GM and China's government recently were in a row over the government's refusal to subsidize the Chevy Volt EV while it would happily subsidize Chinese EVs.  The U.S. government, by contrast showed no interest in promoting American brands over foreign ones and offers equal subsidies for foreign EVs like the Nissan LEAF EV.

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