Daily Management Review

US’s GM Motors Eyeing Developing With Its GEM Project


US’s GM Motors Eyeing Developing With Its GEM Project
After waiting for a period of five years for a strategy to make money in Latin America and the interior of China, US automaker General Motors Co is now set to reap the benefits. This refers to its project that was code-named GEM – a short form for Global Emerging Market.
Two small SUVs that will be part of a new family of sedans and SUVs would be unveiled by the No. 1 U.S. automaker at events this week ahead of the Shanghai Auto Show. The company hopes that SUVs would be so popular that they would account for one in five vehicles sold by it globally by 2023.
According to reports, GM had spent almost $5-billion in the project that it planned would help the company to push sale of up to 2 million vehicles that would be laden with technology and be modern-looking every year targeted at those customers who cannot afford to purchase the vehicles that the company makes for its US market. the company however also hopes that such US targeted vehicles would also be sold in the emerging markets once the income of people increase there.
Cracking the code to become profitable in the markets outside of the so called richer markets has been a challenge for GM for years. This is partly because of the price of those vehicles that the company makes for customers in the U.S. or China’s wealthy coastal cities which are much higher than most customers can afford in the developing and emerging markets. Unprofitability has forced the company to abandon some Southeast Asian countries and pulled back from Africa in recent times.
GM now says that it has finally been able to manufacture vehicles in bulk at affordable prices for emerging markets because of disciplined cost-control. Such vehicles would still have high end technologies and yet allow the company to make profits.
The first of such low cost affordable vehicles that are a result of the new strategy for the emerging and the developing markets which GM hopes would appeal to middle class customers in around 40 countries of the world such as in Brazil and Mexico would be the Chevrolet Tracker and the Buick Encore. This also includes the huge market that has the characteristics of a developing economy within China’s heartland is also included in that list.
A very high level of cooperation with GM’s Chinese joint venture partner SAIC Motor Corp Ltd was part of the GEM project. GM executives said the two companies shared engineering costs and collaborated on purchasing.
Amenities such as touchscreens, mobile phone connectivity, rear-view cameras, and safety features like automatic emergency braking and airbags would be included in the new affordable range of vehicles from GM.
“We may not be the absolute lowest price point in China,” GM president Mark Reuss told Reuters at the automaker’s downtown Detroit headquarters. “But we’re going to be right in that segment where this is a pretty good-sized car... (with) a huge value for what you pay for it.”