Is GM rejigging emerging market strategy?

Janaury 29, 2013: General Motors, recently dethroned by Toyota as the world’s leading carmaker, is re-working its emerging-market strategy. A news report by Reuters quotes CEO Dan Akerson as saying that while the European market needs to be fixed, the company is looking at ways at ways to enter new markets in partnership with Peugeot.

Akerson did not say categorically if SAIC, its China partner, with whom it has had an alliance since 2010, will be its sole global ally. The interview quotes Akerson as saying that “It doesn’t mean that we cannot have a relationship in another part of the world,” noting PSA lacked scale in Latin America and that “we could help one another” there. The report suggests that GM could have one strategy for Southeast Asia and India and another for LatAm and Russia.

What these comments have for India remain to be seen given that GM in India recently bought a significant part of its JV partner, SAIC, and now owns 91 percent, up from 50 percent some months ago.

GM India recently introduced the first of its China-designed offerings in India, the Sail U-VA, and is slated to launch a saloon version of the car on February 1, 2013. The Enjoy MPV is slated for a March launch.

Akerson has been quoted as saying that Southeast Asia and India were “a natural for SAIC” and that GM was indeed in talks with SAIC to establish a manufacturing and sales joint venture in Indonesia.

He also affirmed SAIC as GM’s foremost Asia partner and dismissed the notion that GM and PSA, which also operates in China, could cooperate in the world’s biggest auto market.

GM indicated the importance of SAIC as a global partner in late 2009 when it announced both companies would tie up to market their Chinese-made Wuling-branded products as Chevy cars in India. For now, though, the launch of LCVs is on the back-burner.

Peugeot is going slow on its India venture following problems in its European base. The carmaker, one of the last big global names to enter India, has selected Gujarat for setting a 170,000 capacity plant.

Indications are that Peugeot may tap its global EB engine to drive products here. The EB range is available in 1.0- and 1.2-litre configurations, making it ideal for India.

In December, SAIC said it would make and sell cars in Thailand in a tie-up with a local firm, not GM.

The Reuters interviews quotes Akerson as saying “We (GM and SAIC) are going to see things differently from time to time, but going forward we will be aligned and we will grow together,” he said, adding that GM believed in India’s long-term potential while SAIC became a little nervous over short-term returns.

The report also quotes GM’s international operations chief, Tim Lee, saying, in a separate interview that exploring partnerships with a variety of carmakers would be important in meeting what he described as the auto industry’s “insatiable appetite to find great low-cost products” for emerging markets.