I General Motors halts global retreat
General Motors has called a halt to its global retreat after pulling out of the Indian and South Africa markets, a downgrade to its status as a global player but a spur to its profitability.—
General Motors has called a halt to its global retreat after pulling out of the Indian and South Africa car markets.
The US carmaker, whose brands include Chevrolet, Cadillac and Buick, has been steadily withdrawing from weak or lossmaking markets and leaving Europe and Russia, as well as Indonesia and Thailand.
The strategy downgrades its status as a global player but bolsters GM’s core profitability, allowing it to invest in new technologies and boost its financial health heading into an expected downturn in the US car market.
Mary Barra, chief executive, said the latest move was the last significant withdrawal by GM. “Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalise on growth opportunities for the long term.”
GM will halt sales in India by the end of this year, after which its Indian manufacturing plant will focus on production for Latin America. In South Africa, it will stop sales and production of Chevrolet cars by the end of the year and sell its factory in the Port Elizabeth industrial hub to Japan’s Isuzu.
GM is targeting operating margins of 9-10 per cent globally by 2020, compared with 7.5 per cent last year.
Rebecca Lindland, an analyst at Kel- ley Blue Book, said: “GM is no longer a global company but it is a profitable one.
“For so many years they chased market share, but that’s not Mary Barra’s priority: the priority is fiscal responsibility over bragging rights.”
While carmakers such as Toyota and Renault have been expanding their share of India’s fast-growing car market, GM has been struggling. It sold 25,823 vehicles in the year ending in March, 21 per cent down from the previous year, giving it a market share of 0.9 per cent.
GM’s decision to end production in South Africa is a blow to Pretoria’s drive to attract foreign carmakers through tax incentives and trade agreements with the US and Europe.
Daimler of Germany has formed an alliance with Utah-based Vivint Solar to provide power storage for US homes, in the latest example of how car companies are positioning themselves for a shift towards electrification.
The collaboration pits Daimler directly against Elon Musk’s Tesla, which also offers batteries for home power storage and solar power systems through SolarCity, which it acquired last year.
In March Daimler set a target of having at least 10 models of electric cars on the market by 2022, three years earlier than it had previously planned.
Boris von Bormann, US chief executive of Mercedes-Benz Energy, Daimler’s batteries business, said solar power and residential storage were “essential” for electric vehicle owners to be able to cut their greenhouse gas emissions.
“It is all tied together,” he said. “It’s not just the vehicle, but the full experience for the customer switching from a diesel to an electric vehicle.”
Daimler last year launched a line of batteries for home power storage, which are assembled in Germany, but so far they have been available only in Europe. The launch of the batteries in the US reflects the fact that the company sees it as a key market for electric vehicles, Mr von Bormann said.
Vivint is one of the largest residential solar companies in the US, but like the rest of the industry it has been going through a difficult period. Total installation of new systems dropped to 46 mega- watts in the first quarter, down from 55MWin the equivalent period of 2016.
Other leading US rooftop solar providers have been offering home power storage systems. Tesla has its Powerwall battery, and California-based Sunrun signed a deal last year with LG Chem of South Korea to provide home storage.
The falling cost of batteries has made residential power storage an economically viable option in some places. It is most attractive in states such as California where customers are on electricity tariffs that vary through the day, and can cut their consumption from the grid at more expensive times.
David Bywater, Vivint’s chief executive, said the company had been looking for a partner so it could offer batteries alongside its solar systems and had talked to car manufacturers and other companies about a possible alliance.
Daimler’s batteries are modular, with 2.5 kilowatt hour units that can be fitted together to make a system with up to 20 kWh of storage. That system is expected to sell for $13,000 including associated equipment, system design and installation. That compares to Tesla’s Powerwall, which is on the market at $5,550 for a 14 kWh unit, but Tesla’s price does not include installation.
‘It’s not just the vehicle, but the full experience for the customer switching from a diesel to an electric vehicle’