Wahhaj
10-21-2003, 08:29 PM
Devine: Forget Japan
General Motors - and other foreign automakers - should write off any chance of ever becoming truly significant players in the large, but largely closed, Japanese market, declared GM CFO John Devine. Speaking the day before the annual Tokyo Motor Show, Devine said the cost of entry is simply too great, especially if a carmaker would hope to do things on its own. GM had that driven home - again - when it tried and failed to establish a dealer network for its Saturn brand.
That's not to say the U.S. manufacturer will abandon Japan entirely. It is getting ready to introduce new Korean-made products to support the Chevrolet brand, which will be sold through Suzuki showrooms. Suzuki is part of GM's so-called "global alliance," and as a result, the American manufacturer is betting Chevy will do better than it did when its Cavalier was briefly sold by Toyota during the 1990s.
While Japan may provide only marginal sales, GM has been setting its sites on China, the world's fastest-growing car market. Sales there are expected to surge about 50 percent for all of 2003, following the unprecedented 60 percent increase last year, mostly in the newly-emerging private car segment. Expected to soon surpass the size of the German market, Devine forecast Chinese motor vehicle sales are "on the way to 8 million by 2012 - maybe sooner." Some forecasters believe the country could soar past the U.S. market by around 2025. So, "the game has changed in Asia," said Devine, adding, "we're going to go where the opportunities lie."
Though it followed rivals Chrysler and Volkswagen, GM was a relatively early entrant in China. There were plenty of skeptics, Devine recalled, but few seem to be criticizing the move now, especially since China has become a major profit center for the automaker. Overall, Asian operations provided $162 million in third-quarter revenues, or about $1200 for every vehicle sold in the region, and most of that came from China, where GM's share is now up to 8 percent.
There are those who worry GM might begin shifting resources from North America to Asia. Devine stressed that won't happen, insisting the company "can afford to support" both regions. "We're not hollowing out our business" in the core, home market, he said during an appearance at the Foreign Correspondents Club of Japan.
During his speech, Devine quickly addressed a range of issues impacting GM. He noted that health care costs are a major problem, though the automaker should be able to fully fund its pension liabilities sometime between the end of this year and early 2004. At the end of 2002, unfunded pension liabilities stood at close to $19 billion.
Exchange rates remain another significant source of concern for General Motors, according to Devine, especially the yen/dollar relationship. At peak, he said the imbalance created a $3000 per vehicle "windfall" for Japanese manufacturers, money they then invested to increase their competitive advantage. In recent months, exchange rates have shifted a bit. The dollar is down to about 110 yen from more than 120. Even so, Devine insisted that doesn't reflect what the currencies would settle back to without government intervention, and he repeatedly called on Japanese regulators to stop supporting their currency in a bit to maintain a trade advantage. -Paul A. Eisenstein
Source: Car Connection
You learn something new every day, "Cavalier was briefly sold by Toyota during the 1990s."
General Motors - and other foreign automakers - should write off any chance of ever becoming truly significant players in the large, but largely closed, Japanese market, declared GM CFO John Devine. Speaking the day before the annual Tokyo Motor Show, Devine said the cost of entry is simply too great, especially if a carmaker would hope to do things on its own. GM had that driven home - again - when it tried and failed to establish a dealer network for its Saturn brand.
That's not to say the U.S. manufacturer will abandon Japan entirely. It is getting ready to introduce new Korean-made products to support the Chevrolet brand, which will be sold through Suzuki showrooms. Suzuki is part of GM's so-called "global alliance," and as a result, the American manufacturer is betting Chevy will do better than it did when its Cavalier was briefly sold by Toyota during the 1990s.
While Japan may provide only marginal sales, GM has been setting its sites on China, the world's fastest-growing car market. Sales there are expected to surge about 50 percent for all of 2003, following the unprecedented 60 percent increase last year, mostly in the newly-emerging private car segment. Expected to soon surpass the size of the German market, Devine forecast Chinese motor vehicle sales are "on the way to 8 million by 2012 - maybe sooner." Some forecasters believe the country could soar past the U.S. market by around 2025. So, "the game has changed in Asia," said Devine, adding, "we're going to go where the opportunities lie."
Though it followed rivals Chrysler and Volkswagen, GM was a relatively early entrant in China. There were plenty of skeptics, Devine recalled, but few seem to be criticizing the move now, especially since China has become a major profit center for the automaker. Overall, Asian operations provided $162 million in third-quarter revenues, or about $1200 for every vehicle sold in the region, and most of that came from China, where GM's share is now up to 8 percent.
There are those who worry GM might begin shifting resources from North America to Asia. Devine stressed that won't happen, insisting the company "can afford to support" both regions. "We're not hollowing out our business" in the core, home market, he said during an appearance at the Foreign Correspondents Club of Japan.
During his speech, Devine quickly addressed a range of issues impacting GM. He noted that health care costs are a major problem, though the automaker should be able to fully fund its pension liabilities sometime between the end of this year and early 2004. At the end of 2002, unfunded pension liabilities stood at close to $19 billion.
Exchange rates remain another significant source of concern for General Motors, according to Devine, especially the yen/dollar relationship. At peak, he said the imbalance created a $3000 per vehicle "windfall" for Japanese manufacturers, money they then invested to increase their competitive advantage. In recent months, exchange rates have shifted a bit. The dollar is down to about 110 yen from more than 120. Even so, Devine insisted that doesn't reflect what the currencies would settle back to without government intervention, and he repeatedly called on Japanese regulators to stop supporting their currency in a bit to maintain a trade advantage. -Paul A. Eisenstein
Source: Car Connection
You learn something new every day, "Cavalier was briefly sold by Toyota during the 1990s."