By on June 13, 2010

GM is tired of playing third fiddle in the growth market of Brazil. Come on, being outdone by Italians and Germans? Gotta pay to play, so GM do Brasil announced a new investment package for operations in Brazil. That according to car site Webmotors. The money will be pouring in to the tune of R$2 billion or US$1.1b. GM corporate honchos said R$1.4 billion (US$777 million) will go to raise production capacity and modernize its plant in Gravataí, Rio Grande do Sul. The gaúcho plant now produces the Celta and derivatives. The objective, according to the suits, is to (finally!) retire the Celta line in Brazil and other emerging markets and substitute it with the Onyx family line. Will that get GM ahead?

According to my last post, the Celta family line (based on the first generation Corsa) is responsible for GM’s only 2 inclusions in the top 10. The best the only member of the Onyx line so far (the Agile) can muster is the 13th spot. I foresee a lot of cost-cutting (cheapening to be exact) at a moment when GM’s competitors in Brazil are actually improving their cars’ interiors (VeeDub’s new Gol and Fox, Fiat’s new Uno, Renault’s newish Logan, though Ford not so much).

GM predicts that with the new money, the plant will raise production from 230 thousand cars a year to 380 thousand. The rest of the money (R$600 million or US$333 million) will be applied to improvements to the São Caetano do Sul, São Paulo state factory and also to their proving grounds in Indaiatuba, São Paulo state. This investment will help GM renew all of its product line until 2012.

Not a moment too soon if you ask me. Right now, GM is struggling to hold on to its 20 percent market share and facing an onslaught of refreshed or totally new products from all competitors. How much GM will lose until the results of this investment comes true is anybody’s guess. Likewise: Where does GM keep coming up with this kind of money? And don’t let the Germans hear that GM has cash to invest abroad.

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6 Comments on “GM Invests $1.1 Billion. In Brazil...”

  • avatar

    A compact hatchback from GM, Hmmm… What is the quality of this car? I don’t think it could be worse than the current Aveo.

    What is wrong with 5 platforms used world wide? Make fewer items and make them better!

    Cars do translate from country to country although some areas prefer sedans, some prefer hatches and some prefer wagons.

    What is wrong with GM?

    • 0 avatar

      There’s nothing “wrong” w/ the car. Except for fininshing. It’s very bare bones. It’s not a cheap car, but you get little sound or heat insulation, short cuts and hard plastics are readily apparent, behind that humongous grille there’s no protection for radiator and other sensitive bits. In other words, a very half-baked effort for anyone who likes cars or does a little comparison shopping.

      As to style, to each his own, though I think the Caliber want its snout and general shape back. IMHO, not good. Not good at all.

      Comparing to Aveo, Aveo is much, much better finished. As to driving, I’ve driven neither, but according to friends and from what I’ve read, the Agile is disappointing. TOo jittery, front dives on breaking, curves are not the Agile’s friend.

      Good points, interior design is different and very attractive (if you like unsubstantive) bells and whistles. Thus impress a novice.

      So, the first Onyx family member is a solid meh.

  • avatar

    Where does the money come from? Depreciation and amortization. For those of you who haven’t had accounting, depreciation and amortization are among the costs deducted from revenues to produce income before taxes. So, you can lose money for tax purposes but still generate funds for reinvestment.

  • avatar

    I wonder why they don’t introduce the Cruze down there? It seems like a no brainer with all the intros around the world. They could easily ride the ad spend from the other markets. There’s got to be a corp reason for their weird product mix that’s so different from the rest of the world.

  • avatar
    Dr Strangelove

    Seems like the Olde GM is alive and well.

  • avatar

    Add this to another reason I was against bailing out GM….Mismanagement, misrepresent and sell junk, will not admit it’s junk and expect you to bail yourself out, ask the government for YOU to bail them out! Pay back our government with little interest, will not correct the problems or build more junk to replace the junk with bad P.R., send your bail out thanks and job overseas!

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