Yesterday, we mentioned that GM is looking to buy into a Russian automaker. In that context, it was noted that GM’s future strategy appears to be leaving the United States – at least insofar as manufacturing and investment may be concerned – and moving its capital into so-called “emerging markets.” Maybe that’s why GM is so benign about the pending fuel economy legislation – it really doesn’t care what happens here in 2020.
 
Comes now more proof in support of the thesis:
 
Hindu Business Line, an Indian business publication, reports that it has been told that GM Chairman and CEO Rick Wagoner “is keen on using India as an export base for manufacturing new cars for other regions in the world.” 
 
To that end, GM yesterday announced a joint research venture in electronics and software with an Indian company, IIT-KHaragpur. In making the announcement, GM’s Research and Development Executive Director, Alan Taub, said that ““Indian researchers are among the best anywhere in the world.” The company is also setting up a new educational entity in the country, a sort of GM Institute for India, which will award post graduate degrees in electronics and software.
 
GM sold 36,000 cars in India last year and expects to double sales this year.
 
Small potatoes compared to what GM sells in the United States. But, the investment of General Motors in the Indian market puts it well ahead of most other Western automakers in that market, one that it thought by many to be a stepping stone to the next big untapped manufacturing and sales markets, Africa and South America.
 
It is a reality of life that investment finds the best return, and that’s no less true globally than it is on the New York Stock Exchange. For many years, the combination of United Auto Workers obstinacy and federal government regulation, coupled with import competition, has made return on investment in the United States problematic for the domestic automakers. The pace of auto industry investment outside the United States is now accelerating, as the level of regulation within the country is about to be, again, ratcheted upward.
 
A recent report indicated that Alan Mulally, president of Ford, has referred to the CAFE fuel economy standards as “insane.” (He’d not been aware of them before taking the job.) Yet, his company, along with others has elected to cave in to the new, higher standards, rather than fight them.
 
A cigarette company (Taryton, if you care) once had an advertising campaign that featured a man or woman with a black eye, and the tag line, “I’d rather fight than switch.”
 
Not so for the Detroit automakers. They see much more profit in switching to other countries than fighting the politicians in Washington.
 
But, all is not lost. It’s not like they won’t still be selling cars here.
 
They just won’t be making them here.

What do you think?
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