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Detroit show: Ultra-cheap car a top priority for GM

Aiming low: GM's Chinese-made Baojun 630 could pave the way for a cheap model for developing markets.

Revitalised GM targets emerging markets as it seeks a path to prosperity

12 Jan 2011

GENERAL Motors is developing a low-cost car for developing markets to take on the successful Renault Logan and Ford Figo.

Speaking to the Australian media in Detroit this week, GM international operations president Timothy Lee revealed that an inexpensive and affordable family car solution in emerging countries is one of his company’s top priorities, and potentially one of the most lucrative.

The 40-year GM veteran believes such a move would help create a brand ladder for buyers to move up through as their circumstances change, enabling GM to keep customers and encourage loyalty.

The first step in this thinking is the recently formed Baojun (meaning “treasured horse”) brand in China – a low-cost marque created by SAIC-GM-Wuling Automobile, a partnership between GM and Shanghai Automotive Industry Corporation.

Aimed at the bottom end of the Chinese market, the Baojun 630 went into production in November and will be rolled out to the market throughout this year.

 center imageFrom top: Renault Logan, Ford Figo.

Some industry analysts believe the move is a template for GM to undertake a similar exercise in other markets that require an ultra low-cost vehicle, such as India and parts of South East Asia, with speculation suggesting that the 630 may be used as a basis for other region-specific models.

“In May, for the first time ever, we assembled the GM International Operations leadership team in Shanghai,” said Mr Lee. “It was a management meeting, and we thought: ‘What the hell are we going to do here?’“We’re responsible for nearly half of the volume for the whole of the company. We have a smorgasbord of companies, from the Cape Horn of Africa to the Nile, all of the Middle East, Russia, the CIS, India, all of South Asia, South-East Asia, China, Japan and Korea – what a disparate group that is.

“Probably the number one recommendation out of that group is that we have to have a very, very, very low-cost entry or entries – particularly in the A-segment, B-segment and C-segment – that will serve to an even greater degree the emerging markets of the world.”

Asked if such a car can be bold and pioneering like the original Fiat 500 or Citroen 2CV in mobilising masses of people into the modern automobile, Mr Lee believes that GM has what it takes to make that happen.

“We have tended to be careful and ultra-conservative for a very long time,” he said, “but we have partners around the world now that see things through a different set of eyes than we do, and they bring a lot of great ideas to the table. And, whether those ideas are in Egypt or in Shanghai or in Korea, we are very willing to listen.

“I think we are creative enough to bring new solutions to the table, but if you look at things that Renault has done with the Logan etcetera, these are fundamentally basic products and there’s not a lot of creativity in them.

“So it’s hard to be that expressive in segments where you want to come in with a very, very low price.

“For sure (it will come soon) because it is a very big priority. If we don’t move, somebody else will.

“The bottom line is we are going to create in the A, B and C segments in China very, very effective low-cost vehicles that are designed, sourced and engineered in China – and that’s the sort of creativity that I am talking about. It’s a work-in-progress and we’re pulling metal for the tools today.

“The C segment in China alone by 2015 will be a segment of six million units per year – and that’s, like, are you kidding me?! – so we need a low-cost C-segment (car), a middle-cost C-segment and a up-level C-segment. Think Baojun, Chevrolet and Buick.”

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