Asia holds key to GM’s outlook, chairman says

by Setsuko Kamiya

The boss of American auto giant General Motors Corp. believes the Asia-Pacific market will dictate the carmaker’s global sales outlook.

John F. Smith Jr.

“We like the Asia-Pacific market. It’s the high-growth market over the next 10 years or so,” GM Chairman John F. Smith Jr. told The Japan Times during an interview.

“Two-thirds of the growth in the world auto market will take place in this region (in the coming years). We want to participate in it, and we are strengthening our alliance relationships with our Japanese partners.”

Smith said GM has invested more than $4 billion over the past decade to establish new plants in China, Thailand and India, as well as to bolster its ties with its Japanese partners — Suzuki Motor Corp., Fuji Heavy Industries Ltd. and Isuzu Motors Ltd.

Illustrating the firm’s strategy in this regard, GM recently unveiled the Chevrolet Cruze, which it jointly developed with Suzuki.

The Cruze, which features either a 1.3-liter or 1.5-liter engine, is the first car built by GM in Japan since 1939 and is scheduled to hit the Japanese market in November.

Manufactured at the Kosai plant in Shizuoka Prefecture, the Cruze is also the first car designed by GM for the Asia-Pacific region.

Smith said the model could be launched on the European market in the future.

GM is now seeking to be the first foreign automaker to be admitted to the Japan Automobile Manufacturers Association, membership of which is restricted to firms that manufacture vehicles in Japan.

This quest seems to illustrate GM’s resolve to stay committed to the Japanese market.

“It’s nice to be in a club room, you know, so you get to know what the industry and the government are thinking about, rather than being just a foreign manufacturer importing some cars into Japan,” said Smith, adding that a development of this kind would also open up the Japanese industry group.

GM’s new Chevy will be marketed in Australia early next year — a market that has been instrumental in boosting GM’s volume in the Asia-Pacific region.

While the Japanese market automatically means tough competition, with domestic automakers marketing popular models in the small-car sector, Smith said the Cruze will be competitive in terms of product quality and cost. He also said it would bolster the strong Chevrolet image.

“The Chevrolet owns a position like a rock in the U.S. market. Its image is unbelievably strong in North America,” he said.

“If we can just capture a piece of that in advertising, then, I think we’ve got a great opportunity.”

Smith said GM is also targeting China, one of the few economies prospering amid the global economic slowdown.

With regard to South Korea — the second-largest Asian market behind Japan — Smith said GM’s recent agreement to acquire a stake in Daewoo Motor Co. will also herald great opportunities for GM, which currently sells just 300 units a year in the market.

Commenting on the U.S. market, Smith said the zero-percent auto loan program introduced by the firm on Sept. 19 has boosted consumer demand in line with the firm’s expectations. The program will run until Nov. 18.

“It’s expensive (to run the program). But by the same token, it’s working, and so there’s a lot of plus to that,” he said.

Smith said car demand in the U.S. is expected to come in at around 15.5 million units next year, compared with projected sales of 16.8 million units this year.

He did not provide any relevant figures for GM in this regard, simply saying, “We’re constantly expecting to get higher.”