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GM stands to gain from proposed MUL divestment

The proposed divestment in joint venture Maruti Udyog by government of India provides an excellent opportunity to the General Motors Corporation of the US which is eager to expand business in Asia, reports trade daily Wall Street Journal.

GM, which owns 20 per cent stake in Japan's Suzuki Motor Corporation could benefit if the government sold its stake in 50:50 JV with SMC, the paper said.

SMC is believed to have earlier communicated to the government that it was not interested in acquiring the stake of the Indian partner.

"We have concluded first round of discussions which were largely informal. During this SMC was disinclined to buy government equity in MUL," official sources said in New Delhi.

The paper quoted analysts as saying that sale would provide rare opportunity to foreign investors should India end its 20-year-old partnership in Maruti -- one of the biggest car makers in Asia outside Japan and Korea with an annual output of 400,000 units.

Quoting analysts, it said government valued its share in Maruti at Rs 25 billion to 28 billion, but that number was optimistic, considering the fall in market share.

It noted that Maruti's product line is now in the slow lane, centered around 15-year old design, the Maruti-800, which is losing ground to flashier cars from Daewoo Motors India Ltd, Ford India Ltd and India's number two auto maker, Hyundai Motor India Ltd.

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