GM moves to the Eastern Bloc
In recent years General Motors has been on a cost-cutting spree. Buyouts have come and gone, plant closings, especially in the USA, have occurred and product strategy has evolved. GM has not done away with large SUVs, but has spent some resources on reducing environmental impact. The environmental awareness has allowed them to produced increasingly smaller cars, including the Aveo, which is actually produced by Daewoo in Korea. Despite the poor valuation of the US dollar, or perhaps because of it, GM has been forced to expand manufacturing operations well beyond the American borders. To call GM an American company is as to call Toyota or Honda Japanese. All three players have substantial investments outside of their home countries.
The investments are paying off. By moving manufacturing to places like Eastern Europe and the Far East, the labour cost base, and thusly the price of the vehicle to the consumer comes substantial reduced. Competition ensues, and despite questionable reliability and build quality, GM remains competitive in the US and expanding markets like China.
Today, we saw GM take another step forward by announcing an agreement to produce Chevrolet cars with UzAvtoSanoat, in Uzbekistan. GM will hold 25% stake in the joint venture, a safe bet for GM, while UzAvtoSanoat will hold the majority of the stake.
See more below…
The Press Release:
“Tashkent, Uzbekistan – General Motors Corp. and UzAvtoSanoat have established a joint venture which will play a defining role both in the automotive industry of Uzbekistan and in the continued, rapid global growth of GM’s largest brand, Chevrolet. As announced at a press conference in Tashkent today, UzAvtoSanoat holds the majority stake in the new joint venture called General Motors Uzbekistan with GM holding 25 percent plus one share, with the option of increasing that share in the future.
“As a key element of our growth strategy, GM has moved aggressively in recent years to establish a leadership position in the world’s fastest growing markets,” said Rick Wagoner, GM Chairman and CEO. “We are confident that General Motors Uzbekistan will make a strong contribution to the growth and development of the Uzbek auto industry and economy. The joint venture will also support GM and Chevrolet’s continued growth in Central and Eastern Europe.”
Mr. U. Rozukulov, Chairman of SC UzAvtoSanoat, said, “We are proud to be the first new member of the GM family in the company’s centenary year, bringing modern technology and training for our workforce, more employment opportunities, and more customer choice. The new joint venture gives us the opportunity to introduce high quality products, meeting international standards.”
The General Motors Uzbekistan joint venture will build Chevrolet cars and SUVs for distribution through a network of more than 60 domestic dealerships. Three Chevrolet models, the Captiva, Epica and Tacuma are already being assembled at the joint venture’s plant in Asaka, Andijan province, 350 km from the capital. The Chevrolet Lacetti will join the line-up later this year. Other models from Chevrolet’s global portfolio are going to follow over the next few years, utilizing the plant’s full annual manufacturing capacity of 250,000. Selected models will be exported to neighbouring CIS markets.
UzAvtoSanoat and General Motors will work side by side on the joint venture’s board of management, sharing key positions throughout the new company in areas including manufacturing, engineering, quality, purchasing, finance, human resources, product planning, information technology and legal, as well as sales, marketing and aftersales.
General Motors provides new technology, modern manufacturing processes and training for the joint venture’s 4,700-member workforce. The Asaka assembly plant will operate according to General Motors’ Global Manufacturing System. The system focuses on high quality, leading productivity, commitment of the employees and continuous improvement of all processes. As the plant includes more new vehicles in its production line-up, the joint venture will endeavour to attract parts and component manufacturers to support the growth of the regional automotive industry.
With a population of 27 million, Uzbekistan has a vehicle market with significant potential for future expansion, according to GM. The country’s economy has grown more than 7 percent per annum over the past five years. In 2007, vehicle sales surpassed 70,500 units, which represented an increase of 7.5 percent from the previous year. In 2007, GM Daewoo exported to Uzbekistan more than 170,000 complete knockdown kits (CKD) and semi-knockdown vehicles (SKD) for local assembly.
General Motors Corp. (NYSE: GM), the world’s largest automaker, has been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 266,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.”