General Motors is spending $5 billion to bolster its growth internationally, including the development of a new vehicle “family” that can produce variants to be sold globally.
The announcement comes as the automaker is winding down a $5.4 billion investment program in its facilities across the U.S. that began in early May. The company has revealed about $4.5 billion in projects at plants in Texas, Michigan, Kansas, Indiana and Kentucky.
“With a significant majority of anticipated automotive industry growth in 2015 to 2030 outside of mature markets, Chevrolet is taking steps to capitalize on that growth,” said General Motors President Dan Ammann. “Strengthening Chevrolet’s position through this major investment is consistent with our global strategy to ensure long-term profitable growth in the markets where we operate.”
The new vehicle family is aimed at giving Chevrolet to be more competitive globally. The group will replace several existing vehicles and help lower production and development costs due to the global scale of the vehicles.
“This new vehicle family will feature advanced customer-facing technologies focused on connectivity, safety and fuel efficiency delivered at a compelling value,” said Mark Reuss, GM executive vice president, Global Product Development, Purchasing and Supply Chain.
“It will be a combination of content and value not offered previously by any automaker in these markets that are poised for growth.”
(GM invests $1.4 billion in Texas plant. For more, Click Here.)
Clearly the new family will play a role in China as GM is working with SAIC to develop the “core architecture” and engine. Other parts of the vehicle family will be developed by a multinational team of engineers and designers, GM said.
The goal is to ensure that each vehicle produced is essentially customized to that country’s or region’s buyers. GM expects to sell vehicles out of this new group in China, Brazil, India and Mexico. It will also be used to produce vehicles for “important growth markets.”
(Click Here for details about the UAW making note of GM’s better-than-expected profits.)
The program is expected to grow to more than 2 million vehicles annually with the first entry planned for the 2019 model year. One market that won’t get the vehicles: the U.S., the company said, adding that more details will come as the new vehicles are developed.
A new $5 billion spending plan not aimed at the U.S. is likely to be watched closely by not only the investment community, but also the UAW. The company just reported better-than-expected second-quarter earnings of nearly $1.2 billion, or $0.67 a share – its biggest three-month profit since emerging from bankruptcy in July 2009 – with strong demand for its North American trucks helping fuel the strong performance.
(To see more about UAW’s Williams displeasure with production in Mexico, Click Here.)
Just as quickly as the profit was announced, the union reminded GM that it played an important role in earning that cash flowing into its coffers. UAW President Dennis Williams recently expressed his concern about the growth of vehicle production in Mexico so how he will view any investment outside the U.S. remains to be seen.