Shanghai Automotive Industry Corporation (SAIC) has approved the sale of 1% in the Shanghai-GM joint venture back to venture partner General Motors in a move that will give GM a greater say in the JV’s future operations.
Shanghai Automotive purchased the stake from GM in 2009. The agreement to sell it back still requires Chinese government approval.
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The deal restores GM’s ability to have equal say on operational decisions in China.
The two partners said in April they were close to a deal, where Shanghai GM would first be split into two. Both partners would hold equal stakes in the operations unit, while SAIC retains a 51 percent majority in the sales arm. That allows the Chinese company to include the venture’s revenue in its financial statements, the companies said in April.
Analysts say that GM’s ability to regain equal control of its vehicle manufacturing venture is strategically important as it looks to make more vehicles in China.
