Report: Chinese automaker looks to break from GM, Volkswagen - Apr. 5, 2006

GM gets Shanghaied

Shanghai Automotive, GM's partner in China, has announced plans to build cars on its own. China requires that foreign car makers partner with local companies. This should come as no surprise to GM because the whole idea of the partnership principle was for the local company to develop the know-how to do it themselves. The baby bird is ready to leave the nest.

The model that Shanghai Automotive plans to produce is no basic stripper. It is a version of the executive class Rover 75, a model which is said to share some engineering with the BMW 5-series. Shanghai bought the engineering (and likely the tooling) to produce this model when Rover went bankrupt a couple years ago. China has been buying factories overseas and reassembling them in China. This phenomenon is known by various names including "lift & shift". If GM were to go bankrupt, you could expect to see lift and shift on a major scale.

In fact, you may see the biggest use of lift & shift since the USSR moved its entire armorment industry over the Ural mountains in World War II. When its western factories were threatened by Nazi advances, the USSR moved its entire arms industry over the Ural mountains where virtually nothing was there previously. Within 18 months, the USSR was producing more tanks and aircraft than Nazi Germany.

Ford can't get too cocky, CNN reports that Ford's Chinese partner, Changan Automotive, plans to offer 4 models on its own next year.

Thanks to Darrell M. for the link

Report: Chinese automaker looks to break from GM, Volkswagen - Apr. 5, 2006