General Motors Bets $5 Billion On Emerging-Market Future

Author

Bill Visnic, Contributor

July 28, 2015

General Motors has seen the future. And it ain’t here.

Not exactly, anyway. The nation’s largest automaker still is bullish on the U.S. and other “mature” markets, but the company is announcing today it will invest $5 billion to develop a new, wide-ranging vehicle architecture to enhance the competitiveness of its mainstream Chevrolet brand in the world’s primary emerging markets.

The single new vehicle “platform,” and an all-new engine to accompany it, will replace several current platforms that serve as the foundation for a variety of vehicles GM currently sells in markets such as China, India, Brazil and Mexico, said GM president Dan Ammann in a media conference. Although the new vehicle platform will be able to span perhaps several vehicle size classes, all the vehicles will be relatively small by U.S. standards. The first model derived from the new architecture is targeted for the 2019 model year.

Chevrolet is investing such a large sum because it projects that between now and 2030, growth in these emerging markets will outpace expansion in the world’s mature economies (see graphic below). At the same time, buyers will expect higher levels of technology, safety and efficiency than currently is available in affordable vehicles typical to these regions.

“Customer requirements in these markets are moving very rapidly,” said Ammann.

“This new vehicle family will feature advanced customer-facing technologies focused on connectivity, safety and fuel efficiency, delivered at a compelling value,” added Mark Reuss, GM executive vice president for global product development.

For GM, these new models’ high content levels will be enabled largely by consolidating the several disparate vehicle architectures used today into a single platform and engine family. The development will be coordinated through an agreement with GM’s longstanding Asia-Pacific partner, Shanghai, China-based SAIC Motor. Savings also will come from the larger manufacturing scale, which GM says eventually will reach 2 million vehicles annually. Although they all will be derived from the same new foundation, specific models for various regions and countries will be tailored to suit the market’s prevailing customer tastes or regulatory requirements.

Chevrolet’s new emerging-market initiative is a major component of GM’s corporate-wide plan to reduce the number of vehicle architectures from about 14 today to just four “vehicle sets” by 2025. Ammann would not be specific about how the new Chevrolet plan will affect the company’s manufacturing footprint in the emerging markets, but said do not expect the consolidation of vehicle architectures to equate to a reduction of existing manufacturing capacity in the affected regions.

“The fundamental story here is a story of growth,” he said. The 2 million vehicles planned to eventually be built from the new platform exceeds the current number of vehicles GM currently sells from a variety of platforms, he added.

The company said information regarding specific vehicles and manufacturing aspects will be announced in the future in each market. Ammann said such also would be the case regarding the new engine designed for the program.

This article was written by Bill Visnic from Forbes and was legally licensed through the NewsCred publisher network.


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