General Motors’ Global Expansion in 2013

The year 2012 was a good one for General Motors (GM), and as many economies around the world are beginning to recover from the recent economic slump, the auto industry as a whole has been enjoying improved sales both here in the U.S. and abroad. Among the largest automotive manufacturers, GM is still the sales leader here in the U.S., reporting a steady growth in sales volume over the last year. Of GM’s four leading marques, all have recently reported improved sales growth both at home and overseas. The Chevrolet brand alone posted a healthy 6.2% overall sales volume growth, and the Cadillac, Buick, Oldsmobile and GMC brands did even better. Cadillac posted a 38% growth in sales, a number that was enough to push GM’s luxury car brand ahead of Honda-owned rival Acura and into the fourth overall top slot of all luxury car brands worldwide for the year.

With sales surging at Buick, Oldsmobile, GMC and in the GM light truck group too, GM is aiming for a 7% increase across the board in 2013. GM also has its’ sights set on improved international sales, and hopes to expand in Russia with a $1 billion investment in its St. Petersburg factory that is hoped to increase that facility’s annual production from the current 100,000 units up to some 230,000 vehicles per year by 2015. Russia is currently the second largest car market in Europe, and although losses on the European continent as a whole have always been a concern for GM’s investors, this year GM has plans to pump an extra $5 billion into the European market where the company will introduce 23 GM new car models powered by 13 all-new GM engine designs in an attempt to turn the losses of the past into tomorrow’s profits.

Much of GM’s international growth is expected to occur in Asia and especially in China, where GM has already been the largest foreign automaker for the past nine years, and has accounted for nearly 15% of sales in the entire Chinese auto market in 2012. Buick is already one of the best-selling brands in China and now GM is banking that its Cadillac brand could gain as much as a 50% increase in sales in that nation too.

At a press conference during the recent Shanghai Motor Show, General Motor’s president of Chinese operations, Bob Socia, announced that the company would expand its presence in the Chinese market by building four new plants that would give the firm the capacity to produce five million vehicles a year in that country by the end of 2015. Even though GM also has plans to add more than 500 new car dealerships in China, not all of the vehicles will stay in China, as GM hopes to export over 100,000 of the Chinese-built cars and trucks to other nations. One of those “other nations” might even end up being the USA, as Tim Lee, GM’s president of international operations, has hinted that some of the Chinese-built cars could end up in U.S. showrooms when he said “There’s no reason why we can’t be exporting to the States.”

Lee’s expansion optimism sounds more reasonable when one considers the fact that a reviving auto industry and GM’s 19% government ownership could allow the company to be more profitable by reducing engineering costs and building more vehicles on shared platforms. The government ownership agreement also translates to a current “tax shield” of about $70 billion and a situation where GM won’t have to pay the U.S. government any taxes at all until 2018. A strong line-up of world-class vehicles that are marketed globally could strengthen the balance sheet; however, whether or not U.S. drivers are ready to drive Chevrolet cars and trucks that are made in China remains to be seen.

GM in China – Fast Facts

Many people associate the GM brand of cars as an all-American enterprise with over 100 years of successful history and evolution behind it. While that is quite true, the evolution of the company in the modern era has resulted in many new international business partnerships that may be a bit confusing to some. This is especially true when it comes to General Motors’ future plans in China.

Few American GM car owners realize that GM has been the sales leader among global automakers in China for the past eight consecutive years and it now has 12 joint ventures, two wholly owned foreign enterprises and more than 55,000 employees in China. GM’s manufacturing facilities in China are running at near maximum capacity, and GM is currently in the process of bringing Cadillac’s entire portfolio to that nation.

GM’s numerous liaisons with foreign companies might make one think that the company is somehow “less American” than it once was, but the reality is that General Motors has always been active internationally, and operating as a single global company allows GM to improve the efficiency of its operations and better compete with global competitors. Today, more than 70 percent of its sales now come from outside the U.S. and GM’s top five markets by sales are now China, the United States, Brazil, the United Kingdom, and Germany. Although China is now GM’s largest market, it will always be an American company that sells American-made cars here in the U.S. To help clear up any misunderstandings, here are some quick facts from GM on their association with China:

• Global policy is to “build where we sell,” which lowers vehicle cost for the consumer.
• GM does business in more than 120 countries.
• Roughly 70 percent of GM sales are generated outside of the United States; in most cases, those vehicles are not exported from the U.S.
• GM imports no vehicles from China to the U.S. Every Chevrolet sold in the U.S., with the exception of the Spark, is built in North America.
• Chevy Volt, Buick Enclave and Cadillac SRX, CTS and Escalade are exported from North America to China.
• GM started doing business in China in the 1920s and exited the market following the 1949 Chinese Revolution; GM returned to the country in the late 1990s in partnership with Shanghai Automotive Industry Corp. (SAIC) and formed the Shanghai GM (SGM) joint venture (JV) to produce Buicks in China; other auto manufacturers like Ford are racing to the China market to catch up to GM’s sales success.
• GM did not use U.S. government bailout money to build manufacturing footprint in China; since bankruptcy, GM has announced investments at 30 U.S. facilities totaling more than $7.1 billion, which created or retained 18,641 jobs.
• Doing business in China requires every foreign manufacturer to have a joint-venture with a Chinese company; GM has strategic partnerships in 30 countries, including China, which positions the GM brand as a leading automaker in the world’s largest and fastest-growing automotive markets.