GM wins in Middle East despite losses in US

The current financial crisis faced by General Motors in the United States will not be reflected in its Middle East operations, a senior company official has said.

"The current challenges in the United States are purely domestic and will not in anyway affect our operations in this region," Terry Johnsson, president of General Motors – Middle East Operations told Emirates Business.

"Our global results currently depend on growth markets and the Middle East is an important growth market for us. This is a region blessed with expansion and immense potential for us."

The company's operations in the Middle East will continue to grow at an average of 30 per cent year-on-year and Johnsson saw no signs of this changing.

Early this year, General Motors announced a loss of $39 billion (Dh143bn), the biggest loss of any US car manufacturer, and the company has embarked on cost saving schemes including closure of some of its plants. Last week, it announced it was closing four truck and SUV plants in the US, Canada and Mexico, affecting 10,000 workers, as surging fuel prices hasten a dramatic shift to smaller vehicles.

Johnsson said that the current challenges General Motors is facing are a result of structural and technology transformation.

"The company is 100 years old and has to transform its self and ready its self for the next 100 years where technology changes and the footprint of the company changes, too."

He said the company has so far made announcements that will lead to $15bn of total cost reduction by the year 2011, adding that it was the biggest cost reduction scheme in corporate history.

General Motors has been the global automotive sales leader for 75 years. Founded in 1908, GM currently employs about 284,000 people around the world. With global headquarters in Detroit, GM markets its cars and trucks in 35 countries.

In 2006, 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall. GM has been operating in the Middle East since the 1920s.

GM's vehicle brands sold in the region are Cadillac, Chevrolet, GMC, Hummer, Opel and Saab supported by a unique set of customer-focused services.

In the first three months of this year General Motors made sales of 32, 440 units in the Middle East, up six per cent over the same period last year.

"The year 2008 is set to be a historic one for GM in the region, not just because of the Centennial, but because we will continue to introduce new initiatives.

"For example, we will continue to expand our industry-leading Certified Pre-Owned Vehicle Programme across the region, with the launch of new dealer sites and a new on-line system, ensuring that our vehicles are as accessible to used car buyers as they are to new car buyers," said Johnsson.

In 2006, GM sold 140,509 vehicles in the Middle East, representing a 24 per cent increase over figures recorded in 2005, and the automobile company continues to introduce pioneering programmes in the region.



The Hybrid concept

While the surging price of oil has not had as serious effects in the region as other parts of the world, Terry Johnsson believes that it is high time authorities and the business community in the region consider sustainable methods of energy conservation.

General Motors is the first car manufacturer to introduce the concept of hybrid vehicles in the region and is set to popularise it as a cost-saving approach for transport and haulage companies.

"It takes strong vision to move to hybrid technology in this region since fuel is not yet much of a problem. Companies in the transport business stand to benefit from this technology in the long run," Johnsson said.

General Motors last week delivered the first hybrid vehicles in the region, which use a combination of fuel and battery power, leading to huge fuel savings. After successfully testing the 10 hybrid vehicles it supplied to the Dubai's Roads and Transport Authority, Johnsson said this will be the beginning for the Middle East to embrace the hybrid concept.

General Motors has already been contacted by several regional governments and companies to introduce similar technologies in their countries. Johnsson believes that a number of car manufacturers familiar with the hybrid will start manufacturing hybrid vehicles meant for the region as the concept becomes more popular. General Motors sold 843 hybrids of all types during the first quarter of 2008.

Ford, another US auto major, sold 5,225 hybrids during that time. Toyota sold 278,000 in the United States in 2007 and 430,000 worldwide.

General Motors is expected to increase its hybrid output, turning the car manufacturer into a serious market player in the segment within the next few years. The manufacturer is expected to produce 40,000 to 50,000 hybrid cars this year, more than doubling last year's production.

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