General Motors Corp has sold 49% stake in Yulon General Motors, its joint venture in Taiwan, to Yulon Motor Co at the cost of a symbolic NT$1, GM China Group said in an official statement on Monday.
After the transaction, Yulon GM will become the Taiwanese auto maker's wholly-owned subsidiary and will continue to distribute Buick, Cadillac and Opel vehicles in the island, according to the statement.
"As Yulon General Motors needs a fund injection to cover losses and develop business, and GM has cash flow problems, so they said they don't plan to inject funds," the venture's chief executive, F.J. Pan was quoted as saying on Friday, according to reports.
Sources from GM China told the Jinghua newspaper that GM will not give up the Taiwan market despite the transaction. The Buick brand cars will continue to be built at the venture through technical licensing, while Opel and Cadillac cars will continue to be sold as imported units.
Yulon Motor is reported to inject NT$ 210 million into the existing distributors of the JV, the company said in a filing to the local stock exchange, believing the transaction will bring more effectiveness to its operation.
Yulon General Motors was formed in 2005 when the Taiwanese market boasted vehicle sales of more than 500,000 units per annum, but demand has since then become saturated and vehicles sales in 2008 are expected to be under half that volume.