When it comes to automotive nameplates, arguably none is more distinctly American than General Motors’ biggest marque, a brand that long urged buyers to think of “hot dogs, apple pie and Chevrolet.”
But these days Chevy doesn’t feel quite so American.
The famous Chevy bowtie seems to be popping up everywhere, from Berlin to Beijing. A full 45 percent of the brand’s sales came from outside the U.S. last year, and Chevy wants to raise its share of the international market in 2011. Chevy is a dominant force in Latin America and one of the fastest-growing nameplates in both Europe and China.
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But while Chevy seems to be growing into GM’s global brand, it isn’t carrying the burden entirely on its own. While the humbled GM might have eliminated half of its North American brands after emerging from bankruptcy in 2009, it has actually been expanding the number of brands it operates around the world, most recently creating the Baojun — or “Treasured Horse” — brand for the Chinese market.
The establishment of the brand reflects a significant shift in GM’s strategy. A half century ago, former GM Chairman “Engine” Charlie Wilson told Congress that “for years I thought what was good for the country was good for General Motors, and vice versa.” The comment is frequently misquoted as “what’s good for General Motors is good for America.” However worded, the image of GM was indelibly linked with American manufacturing might.
No longer. Roughly two-thirds of the company’s unit sales in 2010 came from overseas markets, notes analyst Ed Kim, of automotive research and marketing company AutoPacific.
“GM is becoming less reliant on the U.S. market, and by necessity, they have to,” said Kim.
While GM’s image in the U.S. has become tarnished over the years, as its fortunes have declined, it’s quite another story in much of the rest of the world (perhaps with the exception of Europe, where massive losses nearly led the automaker to sell off a controlling stake in its Opel subsidiary in late 2009).
The Opel brand is still a headache for GM, but Chevy is picking up some of Opel’s losses in Europe and its sales are growing elsewhere, most notably in China. Indeed, all of the various GM brands are having a hard time keeping up with demand in that booming Asian nation.
While not the first Western auto manufacturer to put a factory behind the Bamboo Curtain, GM was one of the early players there, and what was a controversial decision at the start of the new millennium is now seen as a brilliant bet. Last year, GM became the first automaker to sell more than 2 million cars in China, selling 2.3 million vehicles, and if the economy there stays solid some analysts believe it will soon hit the 3 million mark.
GM’s biggest brand in China — indeed, the largest car marque on the Chinese market — is Buick, a name that until recently seemed destined for the automotive scrap heap back in North America. But it survived the post-bankruptcy brand obliteration, explained GM Design Director Ed Welburn, “because it would have tarnished Buick’s image [in China] if we eliminated the brand back home.”
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Until now, most of the growth in the Chinese car market has come from the economically fertile Pacific Coast crescent, but that trend’s likely to shift given that smog and traffic-clogged cities like Beijing now aim to slow automotive growth. The Baojun brand was created specifically to go after consumers in second and third-tier cities in the Chinese interior.
With 20 new products coming under its various brand names, GM is betting it can significantly boost its current 13 percent share of the Chinese market — where it already sells more vehicles than it sells in the United States.
The automaker is also pressing the pedal to the metal in other key emerging nations, most notably Brazil, Russia and India which, along with China, are collectively known as the “BRIC” markets.
With the U.S. market recovering at a relatively moderate pace — and consumers demanding hefty incentives to lure them into showrooms — GM officials admit that they are giving careful thought to how to use their finite resources. Prior to the GM’s Chapter 11 filing, former GM Vice Chairman and “car czar” Bob Lutz acknowledged that the carmaker would likely put more of an emphasis on overseas operations.
That’s especially obvious with the Buick brand, where key product development decisions are increasingly being made at GM’s Chinese headquarters, in Beijing. Much of the small car development work for Chevrolet and other GM brands has shifted to what used to be known as GMDAT, or the old Daewoo brand, in South Korea.
The shift reflects the GM’s move to global platforms. It’s a strategy that most carmakers — American, Asian and European — have adopted. Rather than develop a product specifically for each market, GM is working up global platforms that can be shared in, say, China, Germany and the United States.
That doesn’t necessarily mean the cars are identical. There can be notable updates made to reflect regional demand. But the approach helps to build economies of scale.
On the question of whether focusing on a global strategy takes attention away from the U.S. market, GM’s Vice Chairman Steve Girsky notes that “each market will have its own distinct tastes and desires. The challenge for us is to meet those needs while communizing as many parts and components as possible.”
The global approach is also helping GM expand its presence in new markets, “where we want to remain strong,” GM CEO Dan Akerson said recently. But the focus on global products can have a downside, especially if it results in the delay of other programs.
“Because of the bankruptcy, we're about 12 to 15 months behind where we would want to be in new product introductions in this country," Akerson recently acknowledged.
The chief executive has authorized a spending blitz designed to help fill what could be a real product hole in the United States over the next several years, but it could be difficult to catch up, GM officials admit. If so, the carmaker will wind up being that much more dependent on foreign markets such as China, to pick up the slack.
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