General Motors Co. is targeting the emerging ultra-low-cost car market with plans to produce a compact for around $4,000 in Asia.
The segment is attracting increasing attention from manufacturers eager to keep sales momentum in developing markets following the sharp slide in car sales in North America and Western Europe.
"When Tata Motors in India came out with their $2,500 Nano vehicle, it put a lot of auto makers on the spot," said Nick Reilly, GM's newly installed executive vice president, international operations.
Tata started shipping the much-hyped Nano to domestic customers in July, with a base price of just under $3,000, and executives have talked of selling versions of the car in the U.S., Europe and emerging markets over the next two or three years.
"We are not going to make cars that cheap because that is really a specific car for a very specific market that has different emissions standards and specifications than markets like the U.S. and Brazil," said Reilly at a media briefing late Friday in Brazil, GM's third-largest market by sales after China and the U.S..
"So we are looking at lower cost vehicles, but do not know yet where it will be made or where will it be sold, though most likely in Asia."
GM already makes micro minivans with Chinese partners that it plans to export, and is looking to expand that product range. Reilly said that SAIC GM Wuling Automobile Co. will likely sell "significant numbers" of vehicles outside of China, though not under the Wuling brand because GM does not own the branding rights.
Almost two-thirds of GM sales were outside North America in the first half of the year. Reilly, former head of its Asian business, was chosen last month by Chief Executive Fritz Henderson to oversee all international business from headquarters in Shanghai, in part because of his track record in developing alliances.
"We are getting used to partnerships and the industry as a whole will see more partnerships forming in 2009," Reilly said, adding that GM was not currently looking for partners in other large markets, like India.
GM already has joint ventures throughout Asia and is close to choosing a partner to acquire a majority stake in its Opel/Vauxhall business.
Latin America has remained a sweet spot for GM. It sells more cars in the region than in Germany and the U.K. - its two largest European markets - and its penetration in Brazil trails only that in the U.S..
GM ranks third after Volkswagen AG and Fiat SpA in Brazil, and Fiat made an unsuccessful attempt to include the Latin American business in its bid for Opel/Vauxhall.
"Fiat wanted a part of Chevrolet in Latin America, but we were never interested," said Reilly. "Luckily, [that] was not the only deal on the table; otherwise we would have had no choice but to seriously consider it."
