General Motors will source more parts from low-cost countries such as China for its vehicles built in North America and Europe, senior executives reportedly said on Tuesday, according to Reuters.
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“I think every automaker is looking at low-cost countries,” Ray Young, GM North America’s vice president and chief financial officer, told analysts at a meeting on Tuesday, according to the news agency. “It really comes back to who’s going to execute it the best.”
A team of GM executives travelled to China earlier this year to assess the capabilities there and came away impressed, Young said, Reuters reported. “We do believe this represents significant opportunity,” he said.
Reuters noted that about 97% of the parts in GM vehicles built in North America are sourced domestically but added that GM plans to use a China-made engine in the new Chevrolet Equinox compact sport utility vehicle, which will be assembled in Canada and is scheduled to go on sale next year.
GM also plans to import some cars into North America from overseas, Reuters noted. Next year, GM will launch in the US market the new Chevrolet Aveo, a small car built [by Daewoo] in Korea. And later this year, GM will import the new Pontiac GTO [from Holden] in Australia.
GM’s European operations will also purchase more parts from beyond its traditional Western Europe base, GM Europe president Mike Burns said, according to Reuters. GM Europe will source more parts from central and eastern Europe and from Asia-Pacific to cut costs, he reportedly said.
Reuters noted that GM has targeted cutting its material costs, such as car parts and systems, this year by 3% in North America, and by 3.5% in Europe.
“Our intent is really to accelerate beyond the 3% target,” Young reportedly said.
According to Reuters, Young said those cost cuts are accelerating by applying principles it learned from making its manufacturing operations more efficient to other parts of the business.
For example, GM has cut $US25 million in costs from its system to communicate with its thousands of dealers, Young said, according to Reuters.
