Wednesday, August 19, 2009

A $4,000 car from GM?

The company sees a market for an ultra-low-cost compact, a segment automakers are focusing on after the plunge in sales in North America and Western Europe.

By The Wall Street Journal
General Motors is targeting the emerging ultra-low-cost car market with plans for a compact for around $4,000, possibly producing it in Asia.

More on ultra-low-cost cars
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 automakers on the spot," said Nick Reilly, GM's new executive vice president of international operations.

Tata Motors started shipping the much-promoted 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 other emerging markets and in the U.S. and Europe.

"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," Reilly said at a media briefing Friday in Brazil, GM's third-largest market by sales, after China and the United States.

"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," he said.

Reilly also said GM saw a market for a car that costs around $4,000. With Chinese partners, GM already makes micro-minivans that it plans to export and is looking to expand that product range.

Reilly said that SAIC GM Wuling Automobile will likely sell significant numbers of vehicles outside of China, though not under the Wuling brand because GM doesn't 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 GM's Asian business, was chosen last month by CEO Frederick "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 wasn't currently looking for partners in other large markets, like India.

The 10 cheapest cars sold in the U.S.: Model Price Model Price

Hyundai Accent - $9,970

Nissan Versa - $9,990

Kia Rio - $11,495

Chevrolet Aveo - $11,965

Smart fortwo - $11,990

Toyota Yaris - $12,205

Kia Spectra - $13,550

Suzuki Reno - $13,839

Hyundai Elantra - $14,120

Pontiac G3 - $14,335

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