16 July 2009

GM looks to expand, grow in Brazil

Embattled General Motors will spend about $1 billion in Brazil through 2012 to develop a new family of vehicles for South America, one of the priority markets for the U.S. automaker.

GM’s plan calls for the company to invest the majority of the money at its Gravatai factory in Rio Grande do Sul, which it will expand to increase production capacity, said Jaime Ardila, GM’s chief executive for Brazil and the Mercosur region of South America.

The investment, which in Brazilian currency amounts to $1.02 billion (2 billion reais), is part of a $2.5 billion spending plan spanning 2007 through 2012 in the Mercosur region that includes Brazil, Argentina, Uruguay, and Paraguay.

The plan calls for developing two new compact models under the Chevrolet brand and to boost production at GM’s Gravatai plant to 380,000 vehicles a year, three times its current capacity.

The remaining funds will go toward GM’s operations elsewhere in Brazil, company officials said.

Brazil is a crucial market for GM because the country has a healthy economy and burgeoning credit market that has allowed millions of Brazilians to buy cars for the first time.

The U.S. automaker had its best year ever in Brazil in 2008 and is making a profit so far in 2009 despite an economic slowdown that has forced manufacturers to cut costs, Ardila said.

For related information, go to www.isa.org/productivity.