By on January 28, 2013

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:

  1. GM hinged most of its emerging markets strategy on its Chinese JV partner SAIC
  2. 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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42 Comments on “GM, Too Scared To Go To Emerging Markets Alone, Picks Two Even Scarier Escorts...”

  • avatar

    Doesn`t GM operate alone in Brazil, the largest market in the Latin America emerging market region and fourth largest world wide.

    I do agree with the final conclusion though, a new CEO is required for many reasons.

    • 0 avatar

      They’ve been here for over 80 yrs. They launched the first Brazilian car with Brazilian engineering talent, but don’t get the credit, as it was a truck. Over the years the level of local engineering as varied. The Chevette (that made it to America), Vectra, Omega, S10, Celta, Meriva were to a large extent developed here.

      At the moment, with the launch of such cars as Cobalt, Spin and Onix, GM is getting their crdibilty back. These cars are Sonic based but were very much adapted to Brazilian conditions and designed here. That seems the receipe to get ahead here. Pure imports like Sonic or Malibu don’t gain traction.

      Chinese cars aren’t ready for prime time. If they become dependent on SAIC, they could well sell in Colombia or Peru, but more developed markets like Brazil, Argentina and Chile will surely reject the products.

      If the plan is to use Peugeot for Brazil and Argentina, the sheetmetal, engines would have to be very unique. Why would you stop at the GM dealer instead of the Peugeot and get the real thing?

      This comes at the moment that I was prognosticating that the General was back in Brazil. This will squander their chances. Hope Ackerson gets shoved out before he implements this stupidity.

  • avatar
    Volts On Fire

    Any company willing to get in bed with Daewoo will certainly be less than discriminating in its choice of other partners as well.

  • avatar

    As always, the contrast with Ford is highly instructive.

  • avatar

    I called for his resignation weeks ago, the momentum is building. let’s hope we don’t need Rattner again to pull the chord.

    • 0 avatar

      We won’t see Steve Rattner back. He burned some bridges when he wrote his book. Besides, he now has a cushy job managing Mayor Bloomberg’s wallet.

      The guy to take over Chrysler after Iacocca was Bob Lutz, but he was passed over. The guy to take over GM after Whitacre bailed was Bob Lutz, but Akerson engineered a boardroom takeover after getting Lutz “retired”. That’s the only decent engineering Akerson has ever done.

      Akerson should have been let go as soon as he showed he not only wasn’t qualified, but that he couldn’t grow into the job – that would have been about a month after he started. Unfortunately, there’s nobody in sight to replace him until he decides to go, when the board will be forced to find somebody – and he wants to hang on to age 65 (on October 21). GM faithful can only hope he actually does leave on his 65th birthday, or the end of the year, and he doesn’t do too much damage by then.

  • avatar
    Da Coyote

    I’m old enough (drat) to remember when GM actually had innovative engineering – albeit largely cancelled by the unparallelled idiocy of GM’s management. Think 50’s fuel injected Corvette, the turbocharged Corvair, and many other really creative innovations.

    As much as I now loathe, despise, and f*rt in the general direction of GM, I know that there is still plenty of engineering talent there – waiting to be unleashed.

    However, GM continues it’s unbroken record of management consisting solely of those who couldn’t actually create a workable wedge – ever.

    And always remember, a company’s quality is inversely proportional to the number of MBAs on staff.

    • 0 avatar
      sunridge place

      I’m confused. Ackerson has an engineering degree from the US Naval Academy and a Masters Degree in Economics.

      He doesn’t have a MBA.

      • 0 avatar

        “I’m confused. Ackerson has an engineering degree from the US Naval Academy and a Masters Degree in Economics”

        That makes it worse. Engineers make horrible managers. As a mid-30’s engineer, I know this as fact. Virtually every engineer that I’ve seen pushed/shoved/jumped into management has been worse for it. Since economics is fools pretending to understand that which they think can control (I’m misquoting FAscist Hayek here), AND he breathes the air and drinks the water at the RenCen (which I’m convinced stoopifies people), his fate could only be that as the worlds worst manager.

      • 0 avatar
        sunridge place

        Ok…got it.

        The Best & Brightest say:

        No MBA’s
        No Economics degrees
        No Engineers

      • 0 avatar

        Exactly, sunridge, only people who are enthusiastic enough about cars to comment about them snarkily on websites (but too cheap to buy them) should be running car companies.

    • 0 avatar

      @ Da Coyote… Sorry to hijack another TTAC GM bash…A turbocharged Corvair? Somebody correct me if I’m wrong,but wasn’t it a belt driven supercharger?

      • 0 avatar

        mikey: some Corvair’s were turbocharged (called Monzy Spyder’s at first, then Turbo Corsa for G2). Oldsmobile also had a turbo F-85 for 1962-1963. Old’s turbo came out slightly before Chevy’s, so it has the honor (I believe) of being the first production turbo car.

        Meanwhile, the Pontiac Tempest of that day had a front-engine, rear-transaxle powertrain with the two halves connected by a flexible drive shaft (aka “rope drive”) encased in a torque tube.

        GM was pretty innovative back them. However, these cars were expensive to produce and everybody really wanted a big V8, so the Tempest and F85 became more conventional, and the Chevy II came out along side the Corvair.

  • avatar

    Why can’t GM call on the services of its previous jr. partner Suzuki to get a foothold into India?

  • avatar

    That crash video – WTF is that Land Cruiser doing? Ain’t no way to drive a 70 grand vehicle! (I’m sure it’s even more costly over there.)

  • avatar
    sunridge place

    Weird…Toyota has joint ventures in India and Russia. And, they aren’t the same partner.

    Are they weenies too?

    • 0 avatar

      Toyota entering a joint venture with India’s Kirloskar to build cars in India and a joint venture with Russia’s Sollers to build cars in Russia resembles GM forfeiting emerging markets to China’s SAIC in Asian countries outside of China and France’s PSA in Russia and Latin America in what way? Who do you think you’re fooling?

      • 0 avatar
        sunridge place

        Why would Toyota do it? Why would they share profits in those emerging markets? Its just stupid.

      • 0 avatar

        Can you really not figure out the answer on your own? We live in a world governed by corruption and personal relationships. Toyota partnered with organizations that could get them through the red tape of the countries they were starting production in. Toyota still retained control over what would be made and how it would be branded. Kirloskar and Sollers contribute the local knowledge and relationships that will allow them to build their cars. This has no resemblance to GM ceding markets to the Chinese or the French, who will be happy to sell their own cars in GM’s absence.

      • 0 avatar
        sunridge place

        Cool…so tell us how GM’s vehicles will be branded in the Asian growth markets, Russia and South America?

        And, please tell me how they are not involved in the types of cars that will be sold there?

      • 0 avatar

        They didn’t design them and they won’t build them, so I don’t think a few Chevy stickers will turn SAIC owners into your clones.

      • 0 avatar
        sunridge place

        Maybe Toyota could learning something about emerging markets. They don’t have a clue in China.

        You seem to think that a cheap emerging market car should be designed by Bob at an engineering facility in Michigan I guess?

        That would be a mistake. Ask Toyota. These cars are most successful when they are designed by people who know those markets.

      • 0 avatar

        It took them a while to figure out the US market too, but they did it and GM went bankrupt.

  • avatar

    “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.”

    My guess is that “Government Motors” will eventually be owned by the *Chinese* government…

  • avatar
    Da Coyote

    No rule is universal, but did not Cole come from finance?

    And did not Waggoner not have an economics degree?

    Neither served the company well.

    And since I know some retired GM engineers well, and have listened well to their stories, ‘twould be far more likely to have some up there who’s interested more in the company than next quarter’s bottom line.

    In any case, doesn’t matter to me, because I’ll nevah again purchase a gubmit motors product.

    Too much well engineered stuff out there.

  • avatar

    I’m tempted to scan RF writing samples to see if he is masquerading as BS. Only thing he hasn’t done is send an email informing me he has deleted one of my comments.

  • avatar

    I agree that Dan Ackerson needs to go. Actually, he never should have come in the first place. This would leave a leadership void (or, in this case, an empty office) that needs to be filled. Who to tap? Since GM is now “Government Motors”, who better to lead the tattered organization than Bill Clinton. Bill has been doing it to the American public for years. What’s more, they LOVE it. They can’t get enough of it. As for all the bad cars from the past that left a sour taste in people’s mouths? One, “I feel your pain!” from Bill and it would all be forgotten. Plus, the bad car memories from the past wouldn’t matter under Bill. GM wouldn’t be building cars, they’d be building “p***y magnets”. Name your price, Bill, and we’ll toss in the cigars as a bonus.

  • avatar

    I usually try to avoid too many comments about GM management and stick to their products.

    But this just seems patently idiotic.

    Talk about short term gains for long term loss. This sounds like the perfect recipe to create a car company that sets itself up to implode totally in about 5-10 years.

    • 0 avatar
      sunridge place

      Oh please daveinchina….tell us why you chose to comment now on how idiotic this is. What drove you to comment now? What put you over the edge?

      So, GM should do their own R&D and develop their own cars for these markets in spite of the fact that they have product that can easily slide into these market already?

      GM should pick one partner and stick with them around the world in emerging markets?

      Please, define how this is ‘patently idiotic’ and tell us what they should do.

      • 0 avatar

        The idea that GM could develop small cars for emerging markets does seem like a pipe dream when they’ve conceded that Daewoo can make a better job of it than they can for the US market. Nonetheless, a competent car company would try to control its own destiny. Dependence on SAIC could become a liability for GM just as quickly as Chinese operations turned into exposure for the Japanese. PSA? They do okay in markets like Iran, which are boycotted by everyone better.

      • 0 avatar

        Sunny, from your chair in the RenCen, can you please tell us what value GM is adding to these efforts? I’m having a hard time seeing this as anything other than short-term opportunism at the cost of long term value and share.

      • 0 avatar
        sunridge place

        I don’t sit in the Ren Cen Trucky…nor do I work for GM. Nice try.

        So, you would just ignore the ready-to-go Chevy Sail and other products already DEVELOPED and design another car to sell in those markets?

        Yep…lets get a new platform…lets spend a billion dollars to have our own car to keep a little more profit.

        These are low margin sales….developing unique cars is expensive. Why the heck should they go out and develop something they already have in China or are going to develop and share costs with PSA?

        Why does Toyota partner up in emergin markets like India and Russia? Why don’t they just go alone and keep all the profits?

        ‘What value is GM adding’

        They are going to sell more Chevrolets in emerging markets! They are going to take an existing product and be able to build and sell more of them.

        If you don’t see any value there I don’t know what to say. You just think they should start from scratch and spend a billion dollars to develop something they already have.

      • 0 avatar

        Truckducken, sunridge has the right to defend GM.

        FWIW, I don’t blame GM for being cautious because I see the specter of VW overtaking GM in global prominence lurking just over the horizon.

        Toyota is already far ahead of GM and only gaining ground by the day, so GM has to do something or fall even further behind.

        But I think that you are also right with your premise of “short-term opportunism at the cost of long term value and share.” Right on the money there, bud.

        The boys and girls at Ren Cen must have cussed and discussed this before venturing into this alliance with the two escorts. Maybe the synergy of this troika will be more than the sum of its individual parts.

        It’s too early to tell, for me.

      • 0 avatar

        HDC, anyone has the right to defend GM. The question is whether our fellow B&B member is getting paid (directly or via contract) for the pleasure. Months of observation have led me to conclude that it seems to be his sole reason for being here. Not that I mind: this is a great place for idea and info exchange. Lord how I wish somebody from Honda was on TTAC and paying attention!!

        Meanwhile, I guess I am somewhat attached to the traditional concept of an exclusive sales network and brand building. Perhaps that’s obsolete, and moving iron via distribution and partnership makes more sense. It’s possible GM is even ahead of the curve here. I certainly wish them well, but from my narrow US perspective it’s not a well-defined path to automotive prosperity they are taking. SAIC delivers units for GM in China, but where do the GM China profits really come from? If it’s already working, and not leading to eventual co-opting by the partner, then by all means carry on.

      • 0 avatar
        sunridge place

        ‘Lord how I wish somebody from Honda was on TTAC and paying attention!’

        That’s CJ’s job.

        Geez, a person has an opinion and supports it with facts and he’s cashing a paycheck. I don’t get into comments about style, or old cars, or some of the other debates on here because they don’t interest me. I read them because I enjoy this website but I generally find it pointless to debate about the style of a car with someone.

        I’m not like HDC…repeating the same four or five things over and over and over and over.

        I enjoy following automotive sales and business strategies, and, if you read my comments, they generally are supported with facts.

        Well, my shift is almost up…so I have to get outta here.

      • 0 avatar

        “Months of observation have led me to conclude that it seems to be his sole reason for being here”

        Yeah, I actually read all the comments of the topics I am interested in and have come to conclude that there are trolls among us. A few take meaningless jabs at the thoughtful comments submitted by others. Such is the world. Life’s b!tch and then you die. And it’s hell after that.

        “If those who so easily criticize others had actually stood in the arena to do battle, they would not be so quick to judge those who have.” (I found this in 1965 but I don’t know who wrote that. Words to live by)

        Much of the time I don’t agree with the assessment of others but I am somewhat surprised that some people like to criticize the comments of others when there are so many other individuals among the masses who are like-minded. I happen to agree with you in your assessment in this case.

        We can’t all agree on dissecting the facts the same way because we’ve all had different real-life experiences, except for the trolls who live and write in a world of total fiction.

        Just because I don’t agree with someone’s perspective doesn’t mean that the person can’t see things totally different from the way I see them. So I try at all costs to avoid criticism of that person since I haven’t walked a mile in his shoes.

        “Lord how I wish somebody from Honda was on TTAC and paying attention!!”

        I believe they are, but there is very little that they can do here to get the “home office” to make changes beneficial to the North American market, since they are playing on, and planning for, a global scale, weighing costs and benefits that will yield the greatest benefits to their stock holders and the government of Japan.

        FWIW, I actually enjoy reading your input. Did you apply for a writing spot with ttac? Tom Kreutzer did, and he was one of the winners.

      • 0 avatar

        To me the answers are obvious, I guess to you they either don’t matter or are not obvious.

        These are strategic decisions, that are not very well thought out. PSA’s product portfolio isn’t competitive, that’s why they are losing their shirts in Europe and need major financial help. Why would GM partner with a under-competitive product company? That doesn’t make sense, especially when GM is needing a boost in it’s competitiveness in various markets.

        PSA doesn’t make sense that way. Financially or from a product standpoint. This is just a black hole to pour money into that will end up costing GM more than they can ever hope to recoup, either in reputation or in money.

        SAIC on the other hand does make sense from a product standpoint and even from a short-term financial sense. But why would you be mentoring a company that is partially controlled by the Chinese government which does everything possible to steal IP from it’s partners. It’s also mandated that within China all companies must be JV’s. Fine, that’s China, you are basically told if you want to make money you must share your IP and your profits.

        Why the heck would anyone think it’s a good idea to help a company that is partially backed by a government in a way GM will never be to gain market share in emerging markets where it doesn’t have a product. Why would create your own competition in these markets? Why would you teach these companies how to break into a market? These things are strategically stupid and the long-term damage to GM’s profits may perhaps end up being insurmountable. It’s bad planning for short-term gains.

        If GM partnered with Daewoo, I’d have absolutely no issue with this. But the choice of partners here is the problem, not the decision to partner with other companies.

  • avatar

    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.

  • avatar

    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.

    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.

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