Fri, Jan 31, 2003 page6

• GM to sell SUVs at Suzuki outlets in Japan

  • BLOOMBERG
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  General Motors Corp will sell sport-utility vehicles at Suzuki Motor Corp outlets in Japan, renewing a bid to break into the world's No. 2 auto market after sales of a jointly produced car fell 44 percent short of targets.

  General Motors will start selling the Trailblazer mid-size light truck in Japanese outlets of Suzuki, Japan's largest maker of minicars, in February, according to Suzuki executives. The companies expect to sell about 500 of the vehicles annually.

  The Detroit-based automaker is searching for roles for its Asian alliance partners, which include Suzuki and recently acquired assets of Korea's Daewoo Motor Co. Investors say a return to joint sales efforts is cheaper and less risky for both General Motors and Suzuki than trying to produce new models together.

  "I don't really see much point in GM and Suzuki jointly developing models," said Akihide Kinugawa, who helps manage 20 billion yen (US$169 million) at T&D Asset Management, including shares in Nissan Motor Co and Mazda Motor Corp. "It's a good idea for Suzuki to be under the umbrella of a large automaker as it's increasingly difficult to stay independent at that size."

  General Motors and Suzuki had planned to sell about 20,000 units of the 1.3 liter and 1.5 liter Cruze compact a year in Japan.

  Sales of the new model totaled 11,088 in its first year as buyers opted instead for Honda Motor Co's Fit and Nissan Motor Co's March, which sold for about a fifth cheaper.

  Cruze sales in General Motors' Auto World outlets are "not meeting our expectations by any stretch," Fritz Henderson, president of General Motors Asia-Pacific business, said.

  General Motors, the world's biggest automaker, sold 7,749 vehicles in Japan last year, excluding its European Opel and Saab brands. The automaker's own brands account for about 1.5 percent of Japan's import market which itself amounts for less than 9 percent of auto sales in the country. Toyota Motor Corp, by contrast, has about 40 percent of the Japanese domestic market and more than 10 percent of US auto sales.

  General Motors' previous foray into sales with a local partner wasn't successful either. The automaker had planned to sell 20,000 of its Cavalier-branded cars a year in a venture formed in 1995 with Toyota dealerships. Instead, sales totaled 37,600 units during the six-year partnership.

  The plan to market Trailblazers may have more success than trying to sell through a rival offering overlapping products.

  General Motors' Henderson said pricier imports have been the most successful in Japan and will be the main focus of the company's sales push.

  "We'll look at where we can carve out a niche at the top end of the market," Henderson said, adding he doesn't see "much return" in trying to sell less expensive cars in the crowded market.

  General Motors is trying to make more use of its alliance partners in Asia, a market that analysts expect to grow faster than North America and Europe.

  The automaker now controls assets of Daewoo Motor, formerly Korea's second-biggest automaker. Suzuki has joined General Motors in the venture, taking a 14.9 percent stake.

  General Motors also holds 21 percent of Fuji Heavy Industries Ltd, the maker of Subaru cars, and has three joint ventures with Shanghai Automotive Industry Corp in China.

  Those alliances are beginning to benefit General Motors, which earlier this month said profit quadrupled to US$1.02 billion in the October to December quarter from a year earlier. Profit from the Asia-Pacific region tripled to US$66 million.
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