Thu June 9, 2011
As U.S. Sales Stall, Automakers Take Brands Overseas
Car sales in the U.S. have stalled. Right now, GM sells more cars in China than it does here.
Around the world, American brands have a much higher "cool factor" than they do here at home. And U.S. car companies are looking to exploit that.
The future of the American car companies can be summed up in one acronym, BRIC: Brazil, Russia, India and China.
Michele Krebs, a senior analyst for the automotive website Edmunds.com, says these four countries have the fastest growing markets in the world. They've also established manufacturing, and they're making money on commodities. That means they have money to burn.
"There's a young population that is coming into driving age. And there's a growing middle class in all of those countries that is making it possible to buy cars. That never existed before," she says.
That potential has not been lost on American car makers. This week, they laid out their plans for the future.
General Motors presented its ideas at its annual shareholders meeting in Detroit — the first since the company recovered from bankruptcy.
"It really is a new GM and we have a new attitude," says CEO Dan Akerson.
In Brazil, Russia, India and China, GM is leading. "In the BRIC between now and 2015, [sales] volume will grow by 12 million units. That volume bodes well," Akerson says.
But, Krebs says, it's important to remember that the biases that many Americans have against GM and Ford carry over to other countries.
While GM was losing consumer confidence and market share in the U.S., it was planting its flag overseas with its Buick brand. Buick has "grown and grown," Krebs says.
And, GM is looking to grow even more. The company will be launching a new brand aimed at young consumers who are pouring into China's cities to buy their first car.
Meanwhile, Ford won't be outdone. It says it wants to sell about 3 million more cars outside the U.S.
Ford plans to streamline itself and gain economies of scale all over the globe. The company announced Thursday that it's starting a new partnership in Russia, with a plant near St. Petersburg.
Gary Bradshaw, a portfolio manager with Hodges Capital Management in Dallas, says American automotive companies may have been knocked down a few notches in the U.S., but not internationally.
"Just remember that the rest of world, whether they're in China, Brazil or Pakistan...they want to live just like us," Bradshaw says.
He's hoping that means they want two cars in the garage.