GM Exits Australia, N. Zealand; Sells Thai Plant
General Motors continues to shrink its international manufacturing base as it focuses its overseas operations on markets where it sees the best potential for profit.
The list of got shorter last night when GM announced it is selling off its assembly plant in Thailand and shutting down what’s left of its sales, design and engineering activities in Australia and New Zealand.
Fade to Black
GM began shrinking its global vehicle manufacturing footprint seven years
GM headquarters in Detroit (Image: GM)
ago. In some cases, GM abandoned markets hobbled by forces beyond its control. Elsewhere, it walked away in a tacit admission that its own strategies just didn’t work.
These days, GM is concentrating a huge proportion of its sales activities in two places, the U.S. and China. It also describes itself as “well positioned” in South America, the Middle East and South Korea.
The company also supplies its vehicles to more than 120 countries. But its manufacturing footprint is dramatically smaller than it was a decade ago.
Last night’s announcement of a final pullout in Australia caps a slow-motion retreat that began in 2013, when GM’s production retrenchment began.
In 2013, GM confirmed it would stop making cars in Australia by the end of 2017. Ford and Toyota came to the same conclusion around the same time. There was good reason: Despite years of government aid, Australia’s domestic auto industry was being hammered by high costs, low productivity and a relentless stream of cheaper imports.
By 2015, GM had given up on Russia too. That once-promising market collapsed under the pressure of U.S.-driven sanctions and a weakened ruble. Sales plunged more than 50% between 2013 and 2016, destroying a government plan to coax foreign carmakers and their suppliers to launch local production.
A Very Busy Year
GM’s kicked its overseas overhaul into high gear in 2017.
The company abandoned Venezuela and transferred assembly operations in South Africa to longtime Japanese partner, Isuzu Motors.
2017 also was the year GM finally threw in the towel in Europe after losing more than $24 billion there during the previous 17 years. The company recouped a bit of the loss by selling its 88-year-old Adam Opel business to PSA for $2.5 billion. PSA says Opel under its guidance is on track to post an operating profit this year.
Finally, GM sold its auto plant in Halol, India, to China partner SAIC Motor in 2017. Last month GM agreed to sell its second Indian plant, located in Talegaon, to Great Wall. At the time, the two plants were capable of making 260,000 vehicles per year. They were running at 11% of capacity.
Cuts in Korea, Vietnam
In 2018, GM downsized its operations in Korea by closing one of three assembly plants and spinning off its R&D center as a separate entity.
GM Korea had warned of impending bankruptcy, citing a disruptive slump in demand for its small cars after GM changed its mind about trying to establish Chevrolet as a big brand in Europe.
GM even transferred ownership of its modest assembly operation in Vietnam to VinFast, a local producer, in 2018. The factory in Hanoi has been making Chevy models from kits supplied by GM Korea at an annual rate of fewer than 11,000 units.
If you have any question about the almost certain inevitability of 48-volt electrical architecture in vehicles to facilitate the creation of mild hybrids for fuel economy and the utilization of electric superchargers for improved performance, then the number of companies that are pursuing these technologies ought to be an answer.
Chinese electric-car startup Nio Inc. is forming a manufacturing joint venture with Beijing E-Town International Investment and Development Co., which is investing 10 billion yuan ($1.5 billion) in the business.
Have economies of scale come to the production of automotive parts with carbon fiber materials?