General Motors Asia-Pacific has moved swiftly to reassure its partners and customers on the viability of its operations in the region, despite its US parent company filing a Chapter 11 bankruptcy petition in the US and the subsequent sale of a majority stake in General Motors Europe.

Many believe that the chances have improved for GM to emerge leaner and eventually stronger from this year's restructuring, with a much higher proportion of engineering, component sourcing and vehicle assembly to be carried out in lower-cost emerging markets.

The company that may eventually emerge from Chapter 11, dubbed the "New GM" by the Obama administration, will likely include the current Asia-Pacific operations - including Holden in Australia and GMDAT in South Korea; heavily restructured and slimmed-down operations in North America; and its operations in South America.

A strong working relationship will also likely remain in place with key operations of GM Europe. What will be needed most of all by the new company is a much clearer product focus, identity and ultimately a more integrated global strategy. Toyota will be the benchmark.

Isuzu Motors earlier this week confirmed that it intends to keep its broad-based alliance with GM, which includes collaboration in the USA, Poland and Thailand on engines and vehicle production. Toyota and Suzuki have also confirmed their ongoing commitment to their respective partnerships with GM.

Record sales in China

GM China's president Kevin Wale said sales were up by 75% year-on-year in China in May to close to 156,000 units, helped mostly by high demand for minivans/MPVs eligible for government subsidies. He added that GM's China business is self-sustaining and does not require financing from the US.

GM's sales in China in the first five months of 2009 rose by close to 34% to 670,000 units and Mr Wale said the company is struggling to meet local demand. He reiterated his goal of selling over 2 million vehicles in the country within five years and that a new plant will be needed to achieve this target. He also said that GM China is still in negotiations with FAW to set up a new commercial vehicle joint venture.

Thai government assistance needed

Steve Carlisle, president of GM South-east Asian operations, on Tuesday said the chances of General Motors (Thailand) surviving the current downturn are high, but added that "maintaining positive cashflow" in the current environment was difficult.

Its Rayong plant, which employs 1,200 people, began another two-week shutdown this week in response to a 30% drop in domestic sales in the first five months of 2009 to 5,000 units and close to a 50% drop in exports. Production is expected to drop to around 40,000 units this year compared with 140,000 in 2008.

Mr Carlisle insisted that obtaining local loans was essential for GM (Thailand) to continue its investment programme in the country in the short term and that the Thai government "needs to play a facilitating role" in this.

The company until recently confirmed that its $440 million diesel engine plant in Thailand remain on schedule for 2010 completion. Mr Carlisle said that financing discussions with the Export-Import Bank of Thailand and others are ongoing and are expected to be concluded within 2-3 months.

General Motors makes the Colorado pickup truck for world markets in Thailand in collaboration with Isuzu Motors. It also assembles GM-Daewoo passenger vehicles for sale in South-east Asia. It is due to launch production of the Chevrolet Cruze for sales across the Asean region in the next two months.

Elsewhere in Asia
On Monday GM's Indonesia unit, PT General Motors Indonesia, said the company will continue to invest in the country. The company has recently opened four new sales and distribution outlets in across the country and that sales rose by around 20% in the first five months of 2009, though admittedly from very low levels. The overall market dropped by around 35% in the same period.

Mr Carlisle confirmed that its strategy for Malaysia will not be affected by events at its parent company in the USA, with plans to expand the product range, distribution and marketing proceeding as normal. In India, plans to expand its small car range are also proceeding on schedule.

Tony Pugliese