GM Counts on India, China to Offset U.S. Slump
An interesting Bloomberg exclusive "GM, Ford Count on India, China to Offset U.S. Slump" supports the suggestion in the post below that today's global economy helps support the U.S. economy in ways that are fundamentally different than in the past. Consider these excerpts from the article:
1. General Motors CEO Rick Wagoner says the U.S. is in an automotive recession, and he and his fellow CEOs are looking abroad for help.
2. With sales stagnating in Europe and down in Japan as well, U.S. automakers are banking on developing markets such as China and India to ease the pain. "Everybody is aiming at Russia, China and India,'' said an auto analyst. China is an automobile market that's going to be as big as the United States or EU.
3. U.S. sales are expected to fall by 2.5% in 2008 to 15.7 million units, but worldwide sales are expected to rise 4% this year to 75 million vehicles. In other words, almost 80% of the world vehicle market is now OUTSIDE the U.S.
4. The biggest sales gains for vehicles will come from countries where the rate of automobile ownership is climbing, like China, Russia, Eastern Europe.
5. In 2007, GM last year sold more than 1 million vehicles in China for the first time, and sales there are expected to grow by 15% this year.
6. GM sold 1 million units last year for the first time in the Latin America, Africa and Middle East region.
7. GM sold 3.82 million vehicles in the U.S. in 2007, and about 5.5 million units OUTSIDE the U.S., which means that GM now depends on foreign sales for almost 60% of its total sales.
Bottom Line: In previous U.S. economic or automotive slowdowns, especially in the 1970s, 1980s and 1990s, there certainly weren't strong growth areas in countries like China, India, Russia, etc. to help support GM and Ford when U.S. sales slumped. It should be considered a positive development that in an era of globalization, Ford and GM are no longer so dependent on just the U.S. market.