Toyota/Honda/Nissan build plants here while GM (Detroit) closes plants
here and builds plants outside the US
GM may add plants overseas
General Motors Corp.'s fast growth in foreign lands may soon force the
automaker to add and expand factories around the globe, the company said
Despite its struggles in the critical U.S. market, GM reported a 4
percent increase in global sales for the third quarter. The automaker
sold a record 2.4 million cars and trucks.
GM has worked to grow in emerging markets without pouring money into new
factories, which can be a risky venture fraught with uncertainty.
But demand is putting pressure on operations in the fastest-growing
regions, including several Latin American countries, GM analysts Paul
Ballew told Wall Street investors in announcing the numbers.
Ballew said GM is looking to grow in a number of markets.
"We're going to have to add capacity going forward," he said. "We're
going to add that capacity with an eye toward being flexible globally
and making sure we can be lean.
"We're not going to go through a plant-building craze just to add
capacity because we think the industry's going to surge."
Ballew said GM will end the year with sales up a few hundred thousand
vehicles from 2006. Globally, he predicted the market will be up 3
percent and continue to grow.
Already, the automaker is investing $300 million in a new car assembly
plant in Russia near St. Petersburg, where it will build the Chevrolet
Captiva, a midsize crossover SUV. Sales in Russia were up 75 percent in
the third quarter, with 65,700 vehicles sold.
For the most part, however, GM has dealt with the growth by adding
shifts and workers to plants and launched joint ventures with local
automakers, but often hasn't had to build entirely new factories.
"So much uncertainty goes into a global emerging market, you never can
be too careful," said analyst Rebecca Lindland of Global Insight Inc.
"The strategy that can be applied to more established markets can't be
applied in emerging markets."
Automakers have little control over government or regulatory policies in
foreign lands, which can vary greatly from one country to another.
Currency issues, volatile commodity pricing and economic and political
instability can complicate matters.
"The risk associated with spending $1 billion in the United States
compared with spending $1 billion abroad is very different," Lindland said.
GM's sales increases included a 22 percent jump in Latin America, Africa
and the Middle East. Sales were up 16 percent in the Asia Pacific region
and 15 percent in Europe.
The increase marks six consecutive years of growth in GM's worldwide
GM has been working to develop Chevrolet as its chief global brand,
selling 3.4 million worldwide this year with sales up 3 percent year to
"It's a brand we're just starting to invest in," Ballew said.
In the United States, Ballew said, October sales are shaping up similar
to last month, when GM sales were up 4 percent year-over-year.
GM has been working to bolster sales outside the United States in order
to become less dependent on the American market, where sales have
struggled amid increased competition and stagnant overall demand for new
cars and trucks. North American sales were down 6 percent.
The growth in those outside markets, however, isn't enough to offset
losses in North America, where car buyers tend to prefer larger, more
Ballew said bolstering sales in the United States remains the
automaker's top priority.
GM ceded its spot at the world's No. 1 automaker to Toyota Motor Co. in
this year's first quarter, the first time in history the Japanese
carmaker outsold GM. GM outsold Toyota in the second quarter, but not by
enough to take back the No. 1 spot. Through the fist six months of the
year, Toyota has outsold GM by about 39,000 vehicles.
Toyota expects to release its third quarter sales figures next week.
GM shares rose 3 percent, or $1.21, on Thursday, to close at $39.89.