WCA July 2007

From the Americas

Even as its US sales have suffered, GM showed strong first-quarter growth in three of its regional business units: Latin America, Africa, and the Middle East; Europe; and Asia-Pacific. According to Mr Bragman, GM’s best move is to stay focussed on profitable sales and continue to make inroads in countries such as China, India, and Brazil, where the economies and auto markets are growing rapidly. “Right now,” he said, “GM is the best-selling brand in China. With a vast majority of [global] growth in developing markets, GM is in an extremely good position to capitalise on those emerging markets.” A perceived risk for Toyota, according to an internal document obtained by the Free Press earlier this year, is that the Japanese company’s rapid rise in the US could provoke political and consumer backlash. Another element in the Toyota-GM rivalry for top spot in the US auto market is the possibility that mighty Toyota will overreach itself, to the detriment of its sterling name for quality. Last year Toyota opened a new truck plant in Texas, and, this April, started production at a new facility in Indiana and broke ground on another plant in Mississippi. Erich Merkle, director of forecasting for IRN Inc (Grand Rapids, Michigan) told the Detroit newspaper that Toyota may have to slow its growth to maintain the level of quality on which its reputation rests. He cautioned: “Any time you stretch your resources like that, quality is going to become more of an issue.” ❖ Rick Wagoner, the chief executive of General Motors Corp, said on 17 th April that GM would significantly increase its production and purchasing in India. In an interview in New Delhi with the New York Times, Mr Wagoner cited India’s growing car market and culture of thrift and said GM planned to create a ‘local base’ there. The Times ’s Heather Timmons noted that the Detroit- based giant and other big US auto makers, hoping to offset slumping North American operations, are increasingly looking to India. She wrote: “In the past, India has generally taken a back seat to China, but a growing middle class and new manufacturing prowess have made the country popular” for joint ventures and investments. (‘GM Says It Will Make More Vehicles and Buy More Parts in India,’ 18 th April). GM expects India to be the second-fastest-growing car market in the world, after China, over the next 10 years. Car sales in India are growing about 15% a year, a rate projected to continue for the next five years, with low-cost cars making up the bulk of the sales. Mr Wagoner, who had told government ministers and auto industry executives at a conference on the Indian auto industry that it was time for GM to ‘redouble its efforts’ Seeing brighter prospects in India, General Motors will buy more parts and build more cars there

in India, is making good on his resolution. The Chevrolet Spark – a compact hatchback priced at about $7,400 – has been introduced into the Indian market. Mr Wagoner also said GM planned to take advantage of the high-quality, low-cost Indian supply base ‘to source more parts out of India.’ In a statement issued after his presentation to the conference, he said the sourcing increase could be ‘as much as five-fold over the next two years.’ According to analysts, that means GM would be buying up to $1 billion worth of car parts in India annually. That would top the outlay in India of every other foreign auto maker. Carlos Ghosn, chief executive of both Nissan of Japan and Renault of France, announced on 18 th April that within a few years Nissan Motor will introduce its first diesel- powered vehicle in North America. Mr Ghosn gave details about Nissan’s diesel strategy in a speech to the Council on Foreign Relations in Washington, DC. The venue was an unusually prestigious one. The Council on Foreign Relations, founded in 1921, publishes the respected bi-monthly journal Foreign Affairs . Distinguished fellows of its David Rockefeller Studies Program research and write on the most important challenges facing the US and the world at large. In a preliminary meeting with editors and reporters at the Washington Post , Mr Ghosn acknowledged that the problems of the global auto industry stand high among those challenges. He also gave it as his view that – in its resistance to fuel-economy regulations – the industry has brought some of these problems on itself. “[It has] put itself in a situation where everybody is focussing on the car industry,” Mr Ghosn said. “The carbon dioxide emitted by a car looks more damaging than the carbon dioxide emitted by everybody else.” Modern diesel technology, already widespread in Europe, is gradually gaining acceptance in the United States. But Nissan has been slower in its development than other Japanese auto makers. While Toyota and Honda have sold gasoline-electric hybrid models to Americans for years, Nissan did not offer them such a car until January of this year. Now, however, Mr Ghosn has pledged his company to begin selling its flagship Maxima sedan with a cleaner-burning diesel engine, in the US, by 2010. Carlos Ghosn made his name by rescuing Nissan from near-bankruptcy in 1999. He performed this prodigy largely by catering to the American demand for speed and power during the 1990’s heyday of trucks and sport-utility vehicles. Now, the Post ’s Sholnn Freeman writes: “Americans are demanding smaller vehicles with less powerful engines in the face of rising gas prices, global warming fears, and A recent convert to ‘green’ diesel technology, Nissan chief Ghosn addresses US fuel-efficiency needs

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Wire & Cable ASIA – July/August 2007