GM expects to break even in Brazil in 2004 after big losses in the country the previous year. The US based manufacturer is counting on the recovering economy in Latin America to bolster demand as it can no longer rely on European and US success to fuel profits.
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General Motors, the world’s largest car manufacturer, has announced that it expects to break even in Brazil in 2004 after five years of losses, thanks to the forecasted gradual recovery in the country’s economy. Car sales in Brazil are estimated to rise 14% in 2004.
Brazil is Latin America’s largest car market, though car sales fell 3% last year due to a recession. The US manufacturer plans to boosts exports to other Latin American countries as their economies have shown some signs of recovery, investing around $240 million to expand a plant in Southern Brazil, where it will produce a new model. Around 80% of its new model will be sold to the Brazilian market. Placed in the wider context of emerging markets, GM’s losses in Latin America, Africa and in the Middle East grew to $331 million in 2003 from $181 million in 2002.
Back home, GM is coming off a year in which its US market share fell from 28.4% to 28% in 2003. However, GM is not the only vehicle manufacturer in trouble. Its two big US competitors, Ford and DaimlerChrysler, also lost share in the US market last year, while the top three foreign brands, Toyota, Honda and Nissan, expanded theirs.
Despite profits in the automotive sector flatlining in the last quarter of 2003 as the industry struggled, GM forecasts an improvement in profitability in 2004 and increased market share across the world. The company estimates vehicle sales of about 60 million this year, up more than 3% over 2003. This growth will be driven by strong performance in China and other emerging markets, with a gradual recovery in South America. For years, GM has harvested profits in Europe, but poor financial returns from its US and European operations have pushed the group to concentrate on global growth.
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