News >> Asian markets prop up GM, Ford

5/21/2006 DETROIT (AFP) - As they struggle to reignite their ailing North America operations, both General Motors Corp. and Ford Motor Co. are depending on profits from operations in new markets across Asia to keep them afloat.

David Cole, head of the Center for Automotive Research, said it is "extremely important" for both American automakers to do well in countries such as China and India. "This is not an option. You have to do it. The long-range implications for both are huge. You can't not do it," he told AFP. "You've got to be serious about it."

The successes in China to date have also helped both companies shore up their reputations, battered in their home market. GM, for example, recently began running a series of print advertisements touting the fact that on the globe's most level playing field -- China -- GM does just fine, thank you very much. In fact, GM is No. 1, the ad notes.

Where GM does not have to worry about legacy costs, health-care bills and competitors' efforts to manipulate the currency values, it says. Ford's chief executive and chairman, William Clay Ford, also played the China card last week at the company's annual meeting in Wilmington, Delaware, where he was faced some hostile questions about the company's drift and direction.

"It's no secret that Ford Motor Company's long-term success depends, in part, on our expansion in the global marketplace. The good news is that, outside of North America, all of our automotive operations are profitable," Ford said during the shareholders meeting. "We consider these markets to be a critical source of future growth and profits and we are pursuing them aggressively."

He said that last year in China, the world's fastest-growing market for new vehicles, Ford's sales increased 46 percent and the company is preparing to double its production capacity in China within the next 12 months even as it continues to cut back at home. The Chongqing assembly plant, which Ford operates with help from Japanese carmaker Mazda and a Chinese partner, is being expanded from its current capacity of 150,000 units annually to 200,000 units this year. In the future, the plant will build the Mazda3 and the Volvo S40 as well as the Ford Focus.

Ford Asia Pacific and Africa reported sales of 1.7 billion dollars in the first quarter, although profits were sharply lower in Australia, due to weaker sales volumes, unfavorable currency exchange, and the non-recurrence of last year's sale of Ford's interest in Mahindra and Mahindra in India. Meanwhile, GM Asia Pacific reported a 16 percent increase in net income as it earned 81 million dollars in the first quarter, compared with 70 million dollars in the same period a year ago. Overall, GM's sales in China are expected grow 20 percent, to more than 800,000 units, this year.

(AFP News)