General Motors has spent five years rewriting its playbook for making money in Latin America and the interior of China. Now, it's showtime for the first results of a project code-named GEM, for Global Emerging Market.
At events this week ahead of the Shanghai Auto Show, the U.S. automaker is unveiling two small utilities that will be part of a new family of sedans and utilities the automaker forecasts will make up one in five of its global vehicle sales by 2023.
This is just the opening salvo in a nearly $5 billion bet by GM to sell up to 2 million technology-laden, modern-looking vehicles annually to consumers who today cannot afford GM vehicles designed for the United States, but may someday as their incomes rise.
GM has struggled for years to crack the code for growing profitably outside rich markets, in part because vehicles designed for the U.S. or China's wealthy coastal cities cost too much for developing world consumers. The company has abandoned some Southeast Asian countries and pulled back from Africa because it could not compete.
This time around, GM says, through disciplined cost-control it has finally found a way to make affordable vehicles in bulk for emerging markets, loaded with the technology that consumers want and still make a profit.
The Chevrolet Tracker and the Buick Encore — not to be confused with its American cousin of the same name — are the first tests of a new strategy for engineering vehicles to appeal to buyers in around 40 nations of the world's middle class such as Brazil and Mexico, and the huge developing market that exists within China's heartland.
The GEM project involved an unprecedented level of cooperation with GM's Chinese joint venture partner SAIC Motor Corp. GM and SAIC shared engineering costs and collaborated on purchasing, GM executives said.
What potential customers will see are vehicles that include amenities such as touch screens, mobile phone connectivity, rear-view cameras and safety features such as automatic emergency braking and airbags.
What GM is counting on them not to notice is that the number of options is limited, to reduce complexity in purchasing and manufacturing, or that touches such as fully carpeted trunks are absent. "We may not be the absolute lowest price point in China," GM President Mark Reuss told Reuters at the automaker's downtown Detroit headquarters. "But we're going to be right in that segment where this is a pretty good-sized car... [with] a huge value for what you pay for it."