General Motors' China JV Contacted by Regulators, Shares Dip - Analyst Blog

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General Motors Co. 's ( GM ) share price declined 0.3% to close at $33.70 on Aug 12 after Chinese anti-monopoly regulators reportedly contacted the Chinese joint venture of the company as part of an ongoing investigation in the industry. Chinese authorities have launched a series of anti-monopoly investigations on some of the global automakers and technology suppliers to regulate prices and ensure value for customers.

The joint venture between General Motors and the state-owned Shanghai Automotive Industries Corp. - the Shanghai General Motors - sells vehicles under Buick, Cadillac and Chevrolet brands. General Motors is actively cooperating with the National Development and Reform Commission's (NDRC) price supervision and anti-monopoly bureau and also assisted in its investigation and research in the automotive industry.

Following the NDRC investigation, Audi, Bayerische Motoren Werke AG, Daimler AG's ( DDAIF ) Mercedes-Benz, Jaguar Land Rover, Chrysler, Toyota Motor Corp. ( TM ) and Honda Motor Co. ( HMC ) have either lowered the price of the vehicles or spare parts.

Shanghai General Motors focuses on supplying high-quality products and services which conform to the national regulations and policies. The automaker stated that the prices of vehicles and components in China are on par with that in the U.S. or Europe. All the components required for a car, if purchased separately in China, would cost about 265% to 330% of the price of a whole vehicle. Meanwhile, the same would cost 300% of the vehicle price in the American and European markets.

Presently, the company's crucial market is China followed by the U.S., Brazil, Germany, U.K., Canada and Italy. The company focuses on the emerging markets to recoup its global sales by increasing capacity investment to meet the growing demand. The company will be launching 60 new or refreshed vehicles between 2014 and 2018 and 11 new utility vehicles in China in the next 5 years and expects sales in the Chinese market to grow 8% to 24 million vehicles in 2014.

General Motors currently carries a Zacks Rank #3 (Hold).


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This article appears in: Investing , Business , Stocks

Referenced Stocks: GM , HMC , TM , DDAIF

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