Automotive GM to push China growth in IPO sales pitches

By Tom Krisher

AP Auto Writer

DETROIT (AP) -- When General Motors executives travel across the globe to pitch an initial public stock offering, the company that was bailed out by American taxpayers will emphasize its global strength and growth potential in Brazil and China, according to a video and slide show that was posted on the Internet Thursday.

Although the U.S., once GM's primary market, is featured in the show, the lead pitch is about fast-growing emerging markets such as China, where the company said it is the top seller of automobiles and is experiencing tremendous growth.

The videos, posted on the website, are the foundation of "road show" presentations that GM will make repeatedly to investors during the two weeks leading up to the Nov. 18 IPO.

The show begins on Friday, with the company forming two teams that will try to woo investors in money center cities. One team will be headed by Chief Financial Officer Chris Liddell. The other will be run by Vice Chairman Steve Girsky, a former Wall Street analyst.

GM's owners, including the U.S. government, plan to sell 365 million shares from $26 to $29 each in a historic offering that will return the privately held GM to the New York Stock Exchange. The final price is expected to be announced Nov. 17.

The sale is expected to bring in $10 billion, with around $7 billion going to the U.S. Treasury to help repay $50 billion in government aid that got GM through bankruptcy protection last year.

GM said in the videos that two-thirds of its sales now come from outside North America, which in past years had been its largest market.

With its joint venture partners, GM said it is the No. 1 auto seller in China, the world's fastest-growing market. GM, according to the slides, had a 13.3 percent share of Chinese sales last year, followed by Volkswagen with a 10.5 percent market share. The closest domestic Chinese automaker was Changan with a 5.9 percent share, GM said.

"We have a great business in China that's paying us cash dividends," Tim Lee, president of GM's International Operations, said in the video.

GM, Lee said, recognized the growth potential and invested early. As a result, sales have grown 24-fold since 2000, from 75,000 vehicles to 1.8 million last year.

The automaker on Thursday announced record sales in China for October of almost 200,000 vehicles. The company said it's sold 1.98 million vehicles in the country so far this year, a 36 percent gain. By contrast, GM's crosstown rival, Ford Motor Co., which got a late start in China, sold only 468,754 cars and trucks there during the first nine months of the year.

China is on pace this year to be GM's largest market, surpassing the U.S. for the first time. Through October, GM's U.S. sales were 1.8 million, less than the China sales figure.

With the sales growth, China is a huge contributor to GM's bottom line. The company made $734 million after taxes from its two big joint ventures there in the first half of this year, about a third of the $2.2 billion made by the whole company.

GM also said it is the top automaker in the combined fast-growing markets of Brazil, Russia, India and China, with 12.7 percent of the market. It's also the third-largest seller in Brazil.

Executives also will tout GM's dramatically lower costs that came through its restructuring, including labor costs on par with Japanese competitors. Liddell said in his presentation that costs are now so low that GM can hit the break-even point when U.S. sales are depressed, in the range of 10.5 to 11 million per year. In the past, the break-even point was 15.5 million in sales, with a far larger market share, Liddell said.

He also said GM would make "minimal" tax payments because of credits from significant losses incurred in previous years.

Also during the presentations, GM said it has clear visions for its four remaining brands, Chevrolet with practical vehicles, Buick with understated elegance, GMC with professional-grade engineering and Cadillac with distinctive luxury and performance.

Little was said about GM's money-losing European operations, which GM is trying to restructure. The European Opel and Vauxhall brands lost $200 million during the first half of the year. And the company didn't address a lack of continuity and minimal automotive experience among its top managers. CEO Dan Akerson, a telecommunications executive, is GM's fourth CEO in less than two years.

Published: Mon, Nov 8, 2010