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UPDATE 2-GM's China profits quadruple, Korea losses fall
Thu May 6, 2004 12:26 PM ET
By Michael Ellis

DETROIT, May 6 (Reuters) - General Motors Corp. (GM.N: Quote, Profile, Research) said on Thursday that its share of profits from its China joint ventures nearly quadrupled to $162 million in the first quarter, while its losses from Korea's GM Daewoo narrowed.

GM's earnings in China, the fastest-growing automotive market in the world, rose from $44 million in the first quarter last year, according to a U.S. securities filing.

GM, which is continuing to ramp up production in China, in January played down expectations of rapidly growing earnings there this year due to downward pressures on pricing and a shift to sales of more low-margin small cars.

Meanwhile, GM's share of its losses in Korean automaker GM Daewoo fell to $8 million in the first quarter, from $12 million in the year-ago quarter. GM has a 44.6 percent stake in GM Daewoo, which was formed in 2002 after GM and several partners bought some of the assets of former automaker Daewoo Motors.

Sales for GM Daewoo have grown as it has broadened its lineup and sold cars through GM brands such as Chevrolet around the world. GM Daewoo officials have said that they expect sales to double over the next three years.

GM's profits from Asia-Pacific have grown to such a sizable portion of total earnings that the company decided to include more detailed results for the region in its quarterly earnings reports, a spokesman said.

MONEY-MAKER

Many analysts criticized GM's moves into China and Korea, but the region has become a critical profit center for the automaker. GM's earnings from North America have fallen due to higher incentives and increasing competition, and its European unit has been mired in losses for years.

In January, GM said it expected Asia-Pacific earnings to grow to a range of $700 million to $800 million this year, up from $577 million last year. In the first quarter alone, GM earned $275 million from the region, mostly from China.

GM and its main Chinese partner, Shanghai Automotive Industry Corp. (SAIC), have embarked on an ambitious expansion plan in China, working to revive a money-losing venture in northeast China. In March, GM and SAIC agreed to buy an idled engine plant in China that was formerly run by the defunct Daewoo Motors.

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