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Global Motors
Joann Muller
Forbes Magazine

GM has a surprise for its detractors: Those foreign entanglements are starting to pay off.

When General Motors bought up parts of bankrupt Daewoo Motor in October 2002 you could almost hear the derisive laughter around the world. The Korean carmaker was a disaster. Its market share at home had fallen by half, to 10%. Unions were growing more militant by the day, and elsewhere around the world the Daewoo brand had faded into obscurity. Here was another silly GM alliance.

GM executives hunkered down. They were looking at Daewoo as a modest gamble, a way to sell some cars to Koreans and little more. But globalism can exert a mighty pull. Soon GM injected Daewoo with grander ambitions, as a base for exports throughout Asia, especially the booming Chinese market.

Today Daewoo's factories, which had produced so few cars they turned down the thermostat, have now doubled their capacity utilization. Vehicles made at Daewoo factories are being exported to GM-related companies in 120 countries in Asia, Europe and North America. The Daewoo brand may be long gone in the U.S., but Daewoo-built cars are sold here as the Chevrolet Aveo, the Suzuki Forenza and the Suzuki Verona. In China and other parts of the world Daewoo-designed cars are sold under several names: Daewoo, Buick, Chevrolet and Suzuki. GM Daewoo Auto & Technology is expected to produce 800,000 vehicles in 2004 and post a profit by 2005.

The Asian outpost was a bargain. GM picked it up for a $250 million equity investment.

GM's quest for global synergies got off to a rocky start, and it wrote off most of the $3 billion it put into Fiat (where a recapitalization has shrunk GM's stake from 20% to 10%) and Isuzu (where it later pumped in another $500 million). But now, after years of benign neglect, GM is putting the pieces together, tapping the engineering, manufacturing and distribution resources of its global partners. Saabs will be made in Japan, for example; Pontiac GTOs, in Australia. The strategy has the potential to save billions of dollars, dramatically speed up product development and give GM an edge in emerging markets.

Go global or get slammed. "Your competitor isn't just across the street anymore," says GM Chief Executive G. Richard Wagoner. "It's from Korea, from Japan, from Europe. So I think it's required everyone to elevate their game."

For years GM operated as a loose federation, in which Opel in Europe and Holden in Australia each had their own product development and assembly operations, separate from North America. Now duplicate engineering efforts and factories running at less than full capacity are a luxury GM can't afford.

Globalism does not, however, mean that cars have to look identical across the globe. The designs are different, but the underbody components are the same and are pieced together in the same manner. Just as important, GM is overhauling its factories around the world to equip them with flexible machinery that can be programmed to build several different models. Down the road, that will give GM the efficiency and flexibility to do what once seemed unimaginable: building Saabs, for instance, at an underutilized Chevy factory in the U.S.

Even in its early stages Wagoner's "one GM" strategy has already produced hundreds of millions of dollars in savings.

Full Article Here

 

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Good article, all 4 pages. Makes some good points about the failures and successes of GM's global brand purchases and alliances. I think the "One GM" policy Wagoner envisions may take some time to put in place, but would definitely seem to make much more sense for GM globally.

The idea of a "homeroom" in each region is kind of akin to Ford's "center of excellence". For example, Ford has a "center of 4-cylinger excellence" at Mazda in Japan. Ford has essentially placed most of their global 4-cyl design in Mazda's hands b/c they do this best within the "Ford Family". A good example is the new 2.3 liter "Duratec 23" that Ford has -- it's based on a Mazda architecture, but serves in the new Mazda 3 and the upcoming refreshend Ford Focus ST. And they have done this in other areas too -- like the Jag V8 family (originally derived from the Ford Duratec 2.5 and 3.0 liter V6 families) being the basis for all the V8s that will be used in the Ford Premier Auto Group for the future. Expect the next Land Rover's to use a larger version of the Jag Engine.

So this makes a great deal of sense and it's good that GM is following suite. They stand to save a lot of money while getting the absolute best product pulled from their technical resources throughout the world. Especially with the Zeta being developed Down Under, Small cars developed by Daewoo in Korea, small diesels created in Italy, etc.

Good Job GM. I hope this new "One GM" policy works out.
 

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well, it looks like the general is moving forward quite nicely. i must say as an employee of a Saab dealership, i am excited, yet still apprehensive about the 9-2X. it's an Impreza, as most of you know, and that is a great car, (especially the WRX version. mid 5 sec. 0-60. 227hp with AWD! good stuff...) but will it be perceived as a Saab? my livelihood kinda depends on it. sure, last year was a record year for Saab with the intro of the new 9-3, but with Saab USA wanting new stand-alone dealerships, we're going to need an unabashed sales success from this thing. i'm so worried that there is too much publicity that this thing is really a Subie. traditional Saab buyers are a different breed, and some were lost by the discontinuation of the 3 and 5 door 9-3, but what's going to happen if and when they find out that they are looking at a Subaru? it's not a nice thought to me. i know that the entry level (subcompact?) luxury market is relatively new, and a good place to be now, but when you look at other manufacturers, their cars are clean-sheet designs built by their own companies for the most part. BMW has the Mini Cooper and the 1 series is coming. Mercedes is bringing the Smart brand overseas, plus there may be a version of the A class. Audi will probably bring us the A3. Acura has the RSX and TSX, and surely Lexus and Infiniti will follow suit if it looks to be profitable. Saab has a Subaru. it's a great Subie, indeed, and with the Saab "face" on it looks a million times better than an Impreza, but will it sell? i really hope so. :drevil: :plasma:
 

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I really don't believe the average car-buyer is going to look at the car as a Subaru. If it fits them, is priced right and looks good, then they'll buy it.

I"m a huge fan of the "one GM" strategy! :D GM has the advantage of having huge overseas corporations to make themselves more efficient and profitable. That is one of the only things that they currently have over the imports now that they're all coming out with full-sized trucks.
 

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I'm one of those people who is so die-hard GM that I want to see them stick it to the competition no matter what it takes.

If it means closing down a 30 year old Blazer plant 3 years early and selling GM Daewoos instead, then so be it.

I think a highly profitable and competitive GM is better for all concerned than a slowly fading giant that sells outdated product just to keep factories running to appease the UAW or turn a quick and dirty profit at the expense of a competitive image or compelling product.

Look at Mexico. They sold the Opel Astra last I checked. And that interior on the Daewoo-sourced Canadian Chevy Optra-5 looks modern, like a Mazda. What did we have to put up with here? A 10-year old outdated Cavalier interior and a vehicle that sold well but was supported by 4000 dollar incentives. If GM had its pick of the best cars from its lineups / partners around the world, it would be kicking even more butt right now, but we still have cruddy old models holding us back, or some reluctance to import cool cars like the RWD Lumina / Commodores from Holden because of import restrictions.

Until GM truly offers its BEST in the US, and stops producing old junk just to keep some factory running, we are going to have to watch Toyota and others nip hard on GM's heels.
 
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