Competitive Connection

January 7, 2008

Around the globe
Toyota to expand in Russia
Toyota opened an assembly plant on the outskirts of St. Petersburg -- a sign of increasing interest in Russia's booming consumer market.

The plant, employing more than 600 workers, will produce 20,000 cars a year in the initial phase and later increase its output to 50,000, Toyota President Katsuaki Watanabe said. He said production could eventually reach 200,000 cars a year. Toyota invested $202 million into the plant, which took about 2 1/2 years to build.

Several foreign automakers have based operations in St. Petersburg, which has provided tax breaks and infrastructure.  Ford has a factory outside St. Petersburg, and General Motors also broke ground in 2006 on its first fully owned plant in Russia outside the city. France's Renault SA and South Korea's Kia Motors also have opened plants elsewhere in Russia. —Source: Associated Press, December 21, 2007
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What others are saying . . .
Looking ahead in 2008
The challenges will continue in 2008, analysts say. Sales already were weakening in the second half of 2007, said Erich Merkle, director of forecasting for IRN Inc., a Grand Rapids research firm.  "I think it's going to get a tad bit uglier in 2008," Merkle said. He predicts sales of 15.5 million in 2008, down from what's expected to be just above 16 million in 2007.

Detroit automakers are making the right moves, Merkle said.  They're getting away from incentives and fleet sales, he said. They're coming out with better vehicles.  GM's Chevrolet Malibu is the best-looking vehicle for that brand in 40 years, Merkle said. But redesigned vehicles may not be enough to stop the losses in 2008, he said.

"There's nothing they can do about this market," he said. "They're taking all the right actions. It's just going to be some bad medicine they're going to have to swallow in 2008."—Source: Detroit Free Press, December 31, 2007
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Around the globe
Going where the growth is
If it weren't for growth in the 'BRIC' countries (Brazil, Russia, India and China), the auto industry wouldn't have any growth at all. And two of the Detroit Big Three are doing very well indeed in these markets.

Both GM and Ford have been very successful in Russia, where they rank No. 1 and No. 2.  By 2012, Russia will be one of the larger markets in the world -- larger than any European country.

In China, soon to be the world's largest market, GM is the leading automaker and pulling away from Toyota.

Chrysler signed a deal to do more business in Russia, but it's less-well situated to cash in on the growing BRIC economies.—Source: The Windsor Star, January 2, 2008
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A look at the competition
Transplants predict growth in 2008
Several big foreign carmakers, including Toyota and Honda, are projecting that their sales in the United States will increase in the coming year in spite of the housing slump, high gas prices and lackluster consumer confidence.

It is shaping up to be another year of declining market share for the ailing Detroit automakers and of profitable growth for their rivals. The soft market will test the Detroit companies’ ability to stick with their newfound strategy of trying to make more money from fewer sales.

“GM has hopefully learned some lessons from the domestic market,” said Jesse Toprak, director of industry analysis at Edmunds.com, a Web site that gives car-buying advice to consumers. “Market share is not the bottom line goal; profitability is.”-- Source: The New York Times, January 2, 2008
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Then and Now
GM reaches milestone in China
General Motors is the first global auto maker to sell 1 million vehicles in China during a calendar year.

Rather fittingly, the milestone vehicle was a Buick Park Avenue, GM’s strongest brand in the region since it began selling the nameplate there nearly 100 years ago. In fact, China ranks as one of GM’s largest national markets, second to North America.

GM sales in China first eclipsed 100,000 units in 2002. As GM steadily grew its lineup of brands and vehicles in the region, sales topped 500,000 units annually in 2005. With seven joint ventures and two wholly owned foreign enterprises, GM presently sells vehicles under six nameplates in the country. Last year, the auto maker sold 876,747 units in China for an estimated market share of 11.8%.—Source: wardsauto.com, December 21, 2007

To read previous editions of the Competitive Connection or to access other information about manufacturing and labor at GM, visit http://www.gmmanufacturing.info