Emerging Markets: GM's Only Bright Spots Lately. They May Play An Important Role in GM's Future
NY TIMES -- As G.M. painfully restructures in the United States and Canada, and spins off its European business, the company’s operations in emerging markets like China, India and Brazil have survived, so far, virtually unscathed.Unlike G.M.’s United States business, these operations have been growing. Sales increased 10% last year in Brazil, 9% in India and 6% in China. Recent numbers in some areas are even better — G.M.’s sales in the Asia Pacific region were up 44% in May compared with the year before.
Cheap labor in these markets helps to bolster profit margins, while millions of people who do not yet own a car make sales growth easy. Karl Slym, president and managing director of G.M. India, said he expected to add 50 dealers in India this year, stretching into the rural market.
Emerging markets have been the only bright spots at G.M. for some time. The North American and European businesses have racked up enormous losses — $14.1 billion from North America’s continuing operations before taxes in 2008. In Europe, G.M. lost $2.8 billion before taxes in 2008, but G.M.’s Latin American, African and Middle Eastern operations earned $1.3 billion before taxes in 2008, down slightly from the year before.
MP: Let's just hope that our "Buy American" policies don't backfire. GM's future profitability, like many other American companies, might rely pretty heavily on overseas markets to survive. Without the profitabilty of emerging markets (about $2.5 billion) over the last two years, GM would probably be in even worse shape today.
See related CD post above on "Buy American."
HT: Sanil Kori
7 Comments:
So that basically means US products will be Third World designs, slightly modified?
That's about how the rest of things are here from that part of the world.
this is a perfect example of Libertarian economics
Cheap labor in these markets helps to bolster profit margins,
Your answer to everything is cheap labor.
You will not be satisfied to you turn the Us into Bangladesh where labor is reduced to subsistence levels..
These cars are not exports from the U.S. They are locally manufactured. It is very difficult to export U.S. made cars because of protections for the emerging local industry. A U.S, made car would only be able to pass the inspection for each of its parts if it was to for study purposes; in for example, China.
Your answer to everything is cheap labor.
From Slate:
On Wednesday, UAW President Ron Gettelfinger predicted there would be no wage cuts as part of the union's concessions to GM and Chrysler. Gettelfinger argued Toyota's workers actually make $2-per-hour more than UAW workers, if you count bonuses. But ... but. ... Toyota did not go bankrupt. ... Toyota hasn't had to be rescued with $17.4 billion of taxpayer money. ... If Toyota can afford to pay its workers $2/hour more than UAW workers--perhaps because it doesn't have to build cars under the union's legalistic work rule system--that's great.
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These cars are not exports from the U.S. They are locally manufactured.
Oh, you mean like these cars?
From CATO:
An “American” brand tells you little about where all the parts in a car are made.
Cars.com found only 4 cars and 6 light trucks with a domestic content (meaning US or Canadian) above 75%. That list includes the Toyota Tundra and Sienna and the Honda Odyssey. Other Honda’s have a 60-70% domestic content, barely missing the cut.
I agree that "Buy American" is bad policy, but we need to be more proactive about pushing down the walls the other countries are throwing up against our exports. One-way free trade isn't free.
So Cato excuses Chinese junk? I am not surprised. They forgot to even mention US brands at all, and wanted a cheap shot.
How about the Level Field Institute's records?
What makes an American car is the Detroit philosophy of affordable muscle. The car isn't made to any other standard except the US buyer; that means that it is built in the US with power first, affordability second, and then with the necessary fuel efficiency third. No import brand assembled here (Honda/Toyota/Hyundai/Hummer) can meet that high standard for such low of a price.
Faults and all, I'll bet on Detroit until they close the casino. They build cars for this part of the world, not golfcarts for some other part of the world.
At least I know my Northstar-powered Oldsmobile doesn't leave me wanting. Nor has my Civic-sized, US powered/designed Buick. They're cars that I take great pleasure in driving; this pleasure isn't limited to passing riced Civics, bland Toyotas, and the latest plagiarized designs from Kia/Hyundai. I do not want any of my cards to be the last I ever see of affordable muscle, but foreign brands/companies have yet to answer in that department for at least 50 years.
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