GM plans larger Asian presence with new tie-ups

[Ulhas Joglekar]

4 December 1999
GM plans larger Asian presence with new tie-ups
By N. Chandra Mohan
NEW DELHI: The building blocks for GM's strategy to seek a larger presence
in the Asia-Pacific region are steadily falling into place. The world's
largest auto-maker is now finalising a tie-up with the Japanese maker of
Subaru, notably Fuji Heavy Industries Ltd. Speculation regarding such talks
were rife during the recent Tokyo Motor Show where Fuji's president Takeshi
Tanaka said his company might accept equity participation from a foreign
auto-maker.
The GM-Fuji tie-up is, in fact, the third instance of a foreigner taking a
stake in major Japanese auto companies this year. Earlier, Renault AG of
France acquired a 36.8 per cent stake in Nissan. In October, Volvo AB of
Sweden bought a 5 per cent stake in Mitsubishi Motors. Three years ago, Ford
increased its holding in Mazda to 33.4 per cent.
By striking such deals, GM is clearly following the footprints of the
market. The future is the Asia-Pacific region, where all the action is
hotting up among global auto majors. Not surprisingly, it has struck up
alliances with Japanese companies to raise its profile in the region.
GM is targeting the Asia-Pacific as it has the potential to be the world's
fastest growing auto market. Currently, its market share in the region is 4
per cent, which it wants to raise to 10 per cent over the next few years.
Towards this end, it has upped its stake in Suzuki Motor Corporation to 10
per cent. The company has a 49 per cent shareholding in Isuzu Motors Ltd.
Discussions are also underway to acquire control over Daewoo Motors.
GM has already invested $3 billion in the Asia-Pacific region, of which
one-half has been invested in China. The auto major has also built
facilities in Thailand and Indonesia. It seeks a larger presence in India.
More strategic alliances are likely as the current negotiations with Fuji
for a 20 per cent stake indicate. Thus far, its strategy is to use the
design and styling of Japanese cars to penetrate the Asian market.
The company thus is jointly producing an Asian car with Suzuki. A prototype,
codenamed the YGM-1, was unveiled at the Tokyo Motor Show and is slated to
hit the market in 2001. The YGM-1 is built on Suzuki's platform and
powertrain, which will be the basis for building up a series of derivative
models for other markets as well. GM's tie-up with Fuji indicates its
interest in the latter's four-wheel-drive systems for the Asian market.
Fuji's compulsions to accept capital from GM are also clear. Like other
Japanese auto companies, it realises that to survive in today' s global
environment, alliances with foreign companies are necessary. That pooling of
resources and knowledge are imperative. Fuji might be interested in sharing
GM's edge in environment-friendly technologies. It is also financially
strapped as it's affliated to the ailing Nissan.

 For reprint rights: Times Syndication Service
|Disclaimer|

For comments and feedback send Email
Bennett, Coleman & Co. Ltd. 1999.