Rick Wagoner's 38th-floor office in the Renaissance Center offers a sweeping view of the industrial complex west of Detroit along the Detroit River. .
But Wagoner paid it no heed. General Motors' new CEO had his blinds drawn against the afternoon sun, and as he chatted with a visitor, his mind was focused on events halfway around the world.
'Ten years ago, (the hot market) was Europe,' he said, as he sipped a glass of Coke. 'Five years ago, it was Brazil. Now, everybody is focused on Asia.'
Indeed. Asia is quickly recovering from the economic meltdown of 1998. Over the next five years, analysts predict, the region will account for 70 percent of the world's growth in auto sales.
GM is trying to take advantage. The company hopes to grab a 10 percent market share in Asia, up from 4 percent today. To do so, the company must establish a presence in Asia's three core markets: Japan, China and South Korea.
Japan, of course, dwarfs its Asian neighbors in unit sales. But China and Korea are moving up fast. Over the next decade, Korean light-vehicle sales will rise 112 percent, predicts the U.S. consulting firm DRI-McGraw Hill. In that same period, light-vehicle sales in China are expected to rise 135 percent.
If GM is to meet its sales goals, DRI London analyst Ashvin Chotai predicts GM must form alliances with other automakers - or buy them outright.
'GM isn't going to get anywhere near 10 percent by relying on GM and Opel brands,' Chotai said. 'The only way they can do it is by acquisition.'
Judging by Wagoner's plan, GM is following Chotai's advice. In Japan, GM plans to let a local partner - Suzuki Motor Corp. - build GM-branded cars. And in South Korea, GM is pursuing the high-risk acquisition of the troubled Daewoo Motor Co. Ltd. for a reported $6 billion.
Even if the Daewoo deal falls through, GM will not back away from its 10 percent goal. The key to GM's strategy is Suzuki. GM has tapped the Japanese automaker to be the primary designer of small cars for emerging markets.
'To become a mainstream player in Asia, we have become firmly convinced that we need design and engineering out of Japan,' Wagoner said. 'They set the design trends' for small, inexpensive cars.
In December, GM raised its stake in Suzuki from 3.2 to 10 percent, and designated it as its primary designer of small cars for emerging markets.
Suzuki's cheap - and profitable - Wagon R minicar is the top-selling car in Japan. Globally, Suzuki builds more cars than Mitsubishi, Mazda, Daewoo or Hyundai.
GM has already adapted Suzuki's Wagon R+ for the European market, producing an entry-level vehicle in Poland named the Agila. That vehicle went on sale in January.
The Wagon R also is the platform for the YGM-1, a concept vehicle GM unveiled at the Tokyo Motor Show in October. The YGM could turn out to be GM's key product in markets where the Opel Corsa would be considered pricey, Wagoner said.
Here is Wagoner's market-by-market analysis of GM's Asian strategy.
GM wants to gain access to a market that has proven stubbornly resistant to such GM imports as the Saturn and Cavalier.
To do so, the automaker is not relying on imports in Japan. Instead, GM is considering proposals to produce the YGM in a Suzuki plant in Japan.
Because Suzuki's plants now operate close to full capacity, that won't happen in the future. But it could eventually.
'I would be very disappointed if we don't have a Japanese-designed product to sell' within the next five years, Wagoner said. 'We should be able to do that, and YGM is obviously a strong candidate.'
While GM will rely heavily on Suzuki in Japan, it will not completely abandon its import strategy. Opel will remain GM's primary import brand in that market.
GM has not officially decided whether Japan will get the Opel Zafira, which will be built in Thailand. But Zafira likely would seem to be a popular vehicle there, assuming GM's Thailand plant can meet quality standards.
Small car, big market
In China, the YGM is a candidate for production in GM's Shanghai plant, which produces the Buick Regal sedan and a minivan. But first, GM must obtain the Chinese government's permission to produce a small car.
Next, it must decide whether to build a YGM or a Corsa. This summer, GM's Blue Macaw assembly plant in Brazil will launch production of an entry-level Corsa. With its low price and robust design, the car would appear equally suited for Brazil or China.
According to one GM insider, the Corsa is a leading contender for the Chinese market. But Wagoner isn't quite ready to confirm his plans.
'We'd certainly like to build a small car in China,' he said. Production of the YGM in Shanghai 'is not under discussion, but I certainly wouldn't rule it out. ... The initial place to produce it would probably be Japan. But I wouldn't rule (Shanghai) out afterwards.'
In contrast to its strategy in Japan and China, GM is prepared to spend major sums to gain control of a nearly bankrupt automaker.
If GM acquires Daewoo, it would instantly gain 27 percent of the Korean market.
Daewoo also owns a string of plants in such diverse locales as Uzbekistan, Romania, Iran and India. Perhaps its most attractive overseas asset is a plant in Poland, where Daewoo is the top automaker.
But there are negatives. Daewoo has huge debts, and GM has no intention of shouldering that entire burden. Moreover, Daewoo's militant union has threatened to strike if a foreign automaker purchases the company.
Perhaps most important, GM faces tough competition from rival bidders Ford and Hyundai. Those competing bids could drive up Daewoo's price.
If its Daewoo bid fails, GM doesn't really have a backup strategy for Korea. For example, Suzuki won't be much help in a market where foreign imports account for fewer than 1 percent of sales.
While Suzuki appears to be GM's key partner in emerging markets, two other Japanese automakers - Isuzu and Subaru - will play important roles, too.
GM holds a 49 percent stake in Isuzu, which now has primary responsibility for designing GM's diesel engines.
In the United States, GM is producing an Isuzu-designed 6.6-liter V-8 diesel truck engine in Moraine, Ohio. And in Tychy, Poland, Isuzu is producing a 1.7-liter diesel for Opel cars.
Meanwhile, Subaru is expected to develop all-wheel-drive systems and continuously variable transmissions for GM. In December, GM announced the purchase of a 20 percent stake in Subaru's corporate parent, Fuji Heavy Industries.
Initially, the partners will design small and mid-sized sport-utilities and multipurpose vehicles. Europe might well prove to be the primary market for the partners, Wagoner said.
Other Western automakers such as Ford Motor Co. and Renault SA also have formed alliances with Japanese automakers. Unlike Ford and Renault, however, GM has made no effort to control Isuzu, Subaru or Suzuki.
'It's fair to say we do not control these companies, and there is no plan to change that,' Wagoner said. 'That's one reason we were able to come to an agreement with Fuji. They saw (GM's relationship) with Isuzu and Suzuki, and that was something that appealed to them.'
Although Asia provides the brightest prospects for long-term growth, Wagoner can't afford to ignore GM's other overseas markets.
In Europe, GM is trying to reverse earlier neglect with major investments in new products and assembly plants. GM also is giving its European operation more influence over product design.
And it is giving Opel the money to bring those designs to market. Over the next five years, GM will spend $9 billion to upgrade Opel's product lineup.
This year, the company plans to introduce a new Corsa, a new mini, the Opel Speedster, a coupe and a convertible. But Opel's most crucial project will be the Delta world car, the platform for the next-generation Astra.
Project Delta has had a difficult birth. Initially, Delta was supposed to debut in North America as the Chevrolet Cavalier and Pontiac Sunfire.
Last spring, GM was delayed those projects after consumer focus groups rejected prototypes of the two models.
GM learned an important lesson from that debacle, Wagoner said. From now on, GM will give design responsibilities for a world car to engineers in its primary market.
'It made sense to let Europe take the lead,' Wagoner said. 'We didn't think the concept was going to work in North America, and we didn't want to slow Germany down.'
In a fairly stark contrast to Ford - which is rumored to be considering plans to shut down a European assembly plant - GM is spending heavily to upgrade its production capacity.
To prepare for production of a redesigned Vectra, GM has begun a complete renovation of its massive Russelsheim assembly plant in Germany. The new plant will employ 3,000 fewer workers when it opens in 2002. Yet, relations are fairly smooth with the German metalworkers' union, which accepted the job cuts as a trade-off for GM's investment.
This is a vast improvement over the mid-1990s, when GM's German operation was torn by fighting within the parent corporation. At the time, GM was counting on Opel's engineering expertise to design world cars for Asia and South America.
As overseas distractions mounted, Opel's own product lineup suffered design delays and quality problems. In an ensuing shakeup, the metalworkers publicly questioned GM's commitment to Opel.
Lou Hughes - who was then-president of GM Europe - was recalled to Detroit. GM eventually named former Saab chief Robert Hendry to run Opel and Mike Burns to head GM of Europe. Then GM eased its reliance on Opel to design cars for Asia and South America.
The company's effort to upgrade Opel's product lineup is beginning to pay off. GM did not invent the compact minivan segment - the Renault Megane Scenic holds that honor. But the seven-seat Zafira arguably set a new standard for Europe's fastest-growing niche market when it debuted last year.
And the Zafira may be the key to Opel's effort to establish its brand image. The Zafira is a niche vehicle, but it's a rapidly expanding niche. This year, GM hopes to produce 200,000 Zafiras. By 2005, compact minivans will account for 10 percent of European industry sales, GM believes. The automaker wants its share.
To create some excitement for its lineup, Opel also is designing such low-volume vehicles as the Opel Speedster. A two-seat roadster based on the Corsa platform, the Speedster won't be a major money-maker.
Two other niche vehicles are in Opel's product pipeline: an Astra coupe and convertible.
'We are seeing more fragmentation in the market,' Wagoner said. 'We get better profit margins on the Zafira because it's a new niche. So we need aggressive product innovation. ...'
The key executive who must carry out GM Europe's brand makeover is Opel Chairman Robert Hendry. Last November, Hendry appointed Alain Uyttenhoven to the newly created post of brand director to lead Opel's marketing efforts.
Uyttenhoven, 38, previously ran product marketing and management for Mercedes-Benz cars. As the former boss of Saab, Hendry understands the power of a strong niche brand, Wagoner said.
'Hendry used the brand director concept at Saab. It really helped them define the future direction of that company. That's what they are after at Opel. It's the same idea: How do you position products, and how do you develop advertising?'
Hendry is patterning his brand strategy after non-automotive consumer brands. 'The industries that have done it best are on the retail side, whether it's Procter & Gamble and Coca-Cola or, in Europe, Absolut (vodka),' he said in a recent interview.
Still, Europe is a tough market, and it's too early to tell whether all of GM's bets will pay off. Although Zafira is selling well, GM's profits are down. The operation came no where near its profit goal of $800 million for the year. In 1999, GM Europe earned $423 million, down from $468 million in 1998.
While Wagoner has promised a major investment to revive GM Europe, he can't afford to ignore South America. Last year, GM lost $81 million in South America, the mid-East and Africa. Most of those losses were because of the economic troubles of one country: Brazil.
When Brazil devalued its currency, auto sales plummeted. However, the market is beginning to recover, and GM is sticking with its plan to launch production at its Blue Macaw assembly plant this summer. In the city of Gravatai in southern Brazil, the plant will produce a low-cost version of the Corsa.
Brazil's recent economic recovery is shaky, and its political climate is unpredictable. In Rio Grande do Sul, local government demanded to renegotiate its subsidy for Ford's Amazon assembly plant.
After fruitless talks, Ford eventually moved the project to Bahia. Nevertheless, Wagoner says GM has avoided similar controversy.
'I'm not worried,' he said. 'Our project was farther down the road than Ford's. I don't spend much time worrying about the political situation in Brazil.'
Perhaps it's just as well because Wagoner is busy with Asia.
'It takes disproportionate attention because there is so much new stuff to do,' he said. 'What overshadows everything are the opportunities for growth.'