July 10

General Motors Company (GM) to Invest $5 Billion in Vehicles for Emerging Markets

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General Motors Company (NYSE:GM) has declared its intention to invest $5 billion over the coming years to jointly develop with its Chinese partner a new family of Chevrolet vehicles. The latter is targeted at rapidly growing emerging markets. GM will develop a new, worldwide family of vehicles in partnership with Shanghai Automotive Industry Corp (SAIC), the state-owned Chinese automaker that is GM’s main partner in China.

GM and SAIC will design Chevrolet compact cars and sport utility vehicles. The cars will be sold beginning in 2019 in countries including China, India, Brazil and Mexico. The $5 billion will fund GM’s share of engineering cars and retooling factories. The cars will be exported to other markets except to the US and Europe. The two companies anticipate selling over 2 million vehicles a year till 2030.

GM’s strategy involves a gamble on global growth patterns and a fresh approach to the Chevrolet brand. Instead of providing a variety of small car models created by technicians in regional markets, GM will concentrate on a single family of cars having common parts and will sell globally.

According to GM’s president, Daniel Ammann over the next 15 to 20 years, most growth will occur in non-mature markets. As per GM, emerging markets will be responsible for 55% of sales growth until 2030. China will account for 33% and mature markets will account for a mere 12% of additional sales.

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This new vehicle family will incorporate advanced customer-facing technologies covering connectivity, safety and fuel efficiency, provided at a low rate,” commented Mark Reuss, GM executive vice president for global product development.

GM’s plan urges a single new platform in place of a disparate network of cars it presently markets. Chevrolet is investing such a huge sum because it anticipates that between now and 2030; growth in emerging markets will outpace that in the world’s mature economies. Also, purchasers will expect superior technology, safety and efficiency than currently is available in vehicles available in these regions.

Sources: bloomberg, marketwatch

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