Trade Works Both Ways, Part II

In a previous post, I wrote about the growing demand in China for luxury cars, including Cadillacs and Buicks, because of the growing wealth, income and prosperity there.

From today's IHT comes an article about GM's plans to ramp up production and sales in India, one of the world's fastest-growing vehicle markets.

"India's rapid economic growth over the past decade has boosted middle-class incomes and driven demand for cars, increasingly drawing the attention of global auto makers."

The Chevy Spark (pictured above) will sell for $7,300 in India (Rs. 309,000) and is a big part of GM's growth strategy in India.

GM will build a new plant in western India to more than double its production to 225,000 vehicles annually, making it GM's third biggest production hub in Asia, after China (850,000 vehicles) and South Korea (700,000 vehicles).

Bottom Line: GM produces, buys, sells and operates globally, and so should its workers and other Americans. Further, GM's significant expansion overseas in China and India suggests that there is no reason for Americans to buy GM and Ford products, over Toyota and Honda vehicles, so that "the profits stay in the country." The profits from GM's U.S. operations are just as likely to be taken out of the country for investment in China and India, as it is likely that Toyota's profits from U.S. sales will stay in the country for investments like the Toyota Tundra truck factory in Texas.