Toyota/Honda/Nissan build plants here while GM (Detroit) closes plants here and builds plants outside the US
GM may add plants overseas
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 operations.
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 date.
"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 expensive vehicles.
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.