GM Investing $5-Billion Outside of Mature Markets

When General Motors was going through its Troubles a few years ago, when it was making plans to shed divisions like leaves from a maple tree in October, there were some people who made an argument on behalf of keeping Buick in the fold for one simple, enormous reason: China.

When General Motors was going through its Troubles a few years ago, when it was making plans to shed divisions like leaves from a maple tree in October, there were some people who made an argument on behalf of keeping Buick in the fold for one simple, enormous reason: China.

Buick has had a storied history in the world’s largest auto market from early on in the 20th century. According to Buick, Pu Yi, the last emperor of the kingdom, rolled in a Buick, as did subsequent leaders including Dr. Sun Yat-Sen and Zhou Enlai.

And a whole lot of regular people, too.

But when you think of “regular people” in the context of General Motors, it is probably of Chevrolet, not Buick. After all, if we go to Alfred Sloan’s hierarchy of brands, the starting place is Chevy. And now it goes to Buick and/or GMC, then to Cadillac.

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New roads in places like in Brazil, India, Mexico. . .and China

Chevy is what regular people drive. The other brands are driven by regular people who have achieved an aspirational position. Even if it isn’t emperor.

So it comes as not an enormous surprise that today General Motors president Dan Ammann announced, “With a significant majority of anticipated automotive industry grown in 2015 to 2030 outside of mature markets”—as in the United States and western Europe—“Chevrolet is taking steps to capitalize on that growth.”

And to make money you have to spend money, as the saying goes, so Chevrolet is going to be investing (well, GM, really) $5-billion to develop a new vehicle family for growth markets—as in Brazil, India, Mexico. . .and China.

In fact, this program includes joint development of the core architecture and engine with Shanghai-based SAIC Motor. (Once “SAIC” stood for “Shanghai Automotive Industry Corporation”; now it is just a group of letters.)

The vehicle family is going to be specifically developed to meet the specific needs of specific locales. Meaning, this isn’t going to be a case of trying to fit a square peg into a round hole.

Mark Reuss, GM executive vice president, Global Product Development, Purchasing and Supply Chain (a title that is something of a trifecta, given that in order for developed products to be executed, purchasing and supply chain play significant roles), said, “The new vehicle family will feature advanced customer-facing technologies focused on connectivity, safety and fuel efficiency delivered at a compelling value.”

Of course. Internet. Safety. Fuel economy. Which is pretty much of interest everywhere.

But here’s the more pertinent quote: “It will be a combination of content and value not offered previously by any automaker in these markets that are poised for growth.”

Bingo.

In order to be successful in Brazil, India, Mexico. . .and China, they’re going to be creating appropriate combinations, not a one-size-fits all (although the physical size of the vehicles will probably be pretty much the same) approach to content.

Ammann said, “This growth initiative is the next important step toward our goal of building the world’s most-valued automotive company.”

And he’s putting GM’s money where its mouth is.