GM, Too Scared To Go To Emerging Markets Alone, Picks Two Even Scarier Escorts
GM’s CEO Dan Akerson gave an interview to Norihiko Shirouzu, one of the best men in Reuters’ impressive stable of automotive writers. Akerson disclosed two very scary pieces of information:
- GM hinged most of its emerging markets strategy on its Chinese JV partner SAIC
- GM will hinge most of its emerging markets strategy on SAIC and PSA
In a world of stagnating first world markets, emerging markets are the placer to be for growth and volume. Already, more cars are sold and bought in emerging markets than in the U.S., Canada, Japan, and Western Europe. A well-managed car company must have a solid emerging markets strategy, or it will die.
Apparently, GM wanted someone to hold its hands when venturing into these strange lands. Says Reuters:
“Top executives of the global automaker had begun indicating about three years ago that it would use SAIC, which produces affordable no-frills cars in joint ventures with GM, as its preferred partner to expand into emerging markets worldwide.”
Scary. Not only does GM want to share the pie in China, where it has to. It also wants to share in other markets, where is does not need to. Shared growth is only half the growth. And if the growth comes from SAIC’s “affordable no-frill cars,” then the money will end up at SAIC. What’s even scarier: GM helps China’s largest automaker establish itself in the most interesting world markets.
Can it get any scarier? Yes, it does. Says Reuters:
“But in recent months, GM has been looking to also partner with France’s PSA Peugeot Citroen, not only in Europe where the U.S. auto maker is trying to fix its troubled Opel unit but also in Russia and Latin America.”
Already, the GM-SAIC joint venture is selling Chevy Sail compacts to South American, along with Chinese-made Wuling microvans, nearly always using GM’s dealer networks. Now it wants to share its future with French patient PSA.
According to Reuters, Akerson “is now trying to divide the emerging world between its two partners. SAIC in Asian markets outside China and PSA in Russia and Latin America.”
Imagine: You walk through dark alleys in foreign lands. You are accompanied by one guy what wants you dead, sooner or later, and another guy who will be dead, sooner or later. Very, very scary. GM does not new partners. It needs a new boss.
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- Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
- Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
why cant PSA go bankrupt, get bailed out, cut costs and be profitable on lower volume the way GM is now compared to pre bankruptcy? I admit that I would hate to see Citroen die and thus would support any French bailout. Besides somebody is bound to point out that in EU banks were being bailed out left and right and EU commission didn't complain so why not bail out a big auto maker.
GM seems to be doing a great job of mentoring its future competitors... One wonders how much longer the junior partner in the JV will remain the junior, once they have figured out how to not only build, but market cars outside of their home markets. The writing is already on the wall with SAIC, especially when you look at some of their higher end offerings, Roewe anyone? Tell me this thing won't be competing with a Buick in ten years' time. http://www.roewe.com.cn/roewe950/ It is all the more ironic that many of the current Roewe models actually share common platforms and powertrains with mid-size GM vehicles currently on sale in the US. A parallel is the relationship between Hyundai and Mitsubishi. Throughout the 80s and 90s, the former built obsolete Mitsubishi models in Korea under its own brand. Though Mitsubishi still owns a 25% interest in Hyundai Motors, the Koreans have really emerged as the more successful car maker in recent years. I can certainly see a similar thing happening with GM's joint venture partners around the world.