GM chairman and CEO Rick Wagoner declared Asia “the new hotbed of global automotive industry competition” and predicted the region will account for well over half the industry’s sales growth in the coming decade at a forum in Beijing.
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“An automaker simply cannot become or remain a global industry leader without a significant presence in Asia, “Wagoner said at the Fortune Global Forum. He participated in a panel discussion entitled, “The Auto Industry in Asia : An Open Road?”
“Fortunately, the road is wide open, particularly in the region’s emerging markets, such as China, India, Thailand and Korea, and particularly for those companies with a solid investment strategy and a full corporate commitment,” Wagoner said.
“China’s vehicle market is entering a period of steady, sustained growth, which we expect to level off at about 10% annually over the next few years. Led by a passenger-car market that continues to shift from institutional buys to private purchases with rising personal incomes, we anticipate growth across the board. The dominant players will be those that leverage global resources and capabilities on the one hand, and on the other meet the specific needs of the local market.”
Product diversity also will be important, Wagoner said.
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By GlobalData“In the automotive industry, that means multiple brands and multiple products. The Asian consumer is as sophisticated as the consumer in any other region of the world thanks in large measure to the free flow of information via the Internet and television. Today their standard of expectation is measured against the best in the world, not just against the best in the country.”
To help navigate the Asian automotive industry’s local complexities requires “strong local talent or a strong local partner, or even better, both,” Wagoner said. Partnerships are required by law in China and for GM they have worked “extremely well.”
“Working with our Chinese partners, we are leveraging the resources of industry leaders while sharing both the risks and rewards of new investments. In China, we expect joint ventures to remain the driving force for the continued growth and development of the industry. In other areas of the region, we are employing a mix of global industry expertise with strong local talent. The goal is a local industry that can stand on its own two feet and be globally competitive.”
To reach that goal “you also need to establish an integrated value chain that includes not just manufacturing and sales, but engineering, design and testing,” Wagoner said. “The region wants and needs to develop its own industry, and it can’t do that if everything but the manufacturing is done outside the region.”
Manufacturers need to understand their social responsibility role as well, Wagoner said.
“There are important issues of infrastructure, emissions control and the consumption of resources that need to be the responsibility of manufacturers as well as the government. By taking a cooperative and pragmatic approach with local governments, the national industry can move forward at a much faster rate and provide important benefits to the consumer.”
Wagoner cautioned that while the region’s automotive industry is a wide open road, delays can be expected.
“Economies will fluctuate. Protectionism will flare up. Not all markets will develop at the same speed and in the same way. We must be realistic. To expect China’s growth rate to be sustainable at the rate we experienced in 2003 and 2004 is unrealistic. But the future opportunities are undeniable.”
