Do You Know Where Your Car is Made?
The US motoring behemoth General Motors hit the headlines in May 2009 after a decision to double the number of cars manufactured offshore in places like Mexico, China and South Korea, but sold in the US market. The decision was controversial given the need to support jobs in the beleaguered US market, while at the same time ensure the long-term viability of US car companies by moving production to lower-cost markets.
In Australia it’s a similar story for one of our most famous car brands, Holden (which is owned by General Motors). A familiar site is the rows upon rows of cars that have arrived on container ships unloaded onto docks for sale in the domestic market. Many of these cars bear the Holden badge, but are actually manufactured abroad. Both the Holden Cruze and the Captiva are made in Korea. Conversely, Holden also produces cars in Australia that are shipped to the US. For example the Australian-built Chevrolet Caprice Police Patrol Vehicle is sold to law enforcement departments across North America.
Even the famous European brands no longer manufacture cars in their home markets. Volkswagon manufactures its Jetta and Beetle cars in Mexico and the Polo is made in South Africa. BMW’s 3 series vehicles are also made in South Africa. Mercedes manufactures its M, R and G class vehicles in the US, the CLC is made in Brazil and Spain produces the Vito models.
The decision by car manufacturers to shift production to different markets around the world is generally a financial one: moving manufacturing to the location in which it makes the most financial sense is an important part of securing the long-term futures of the car companies.
“Car manufacturers’ strategies to manufacture vehicles overseas are likely to gain rather than reduce speed in the years to come”, says sgfleet CEO Andy Mulcaster. Mr Mulcaster adds that car makers will need to find ways to recover from the global financial crisis, which hit car companies hard, and respond to new trends such as increasing consumer preferences for small, environmentally-friendly vehicles.
Indeed, General Motors recently announced that its joint venture with Shanghai Automotive Industry Corporation Group would expand its business in Asia. The joint venture currently operates eight other joint ventures in China and has recently announced a new Hong Kong-based initiative that will spearhead the business’s expansion into other markets, especially India.
Nick Reilly, a General Motors’ executive vice president, explained the decision in an announcement stating that “both companies felt this was the proper time to deepen cooperation beyond China’s borders… as part of our individual companies’ long-term growth strategies.”
Holden purists will be pleased that as yet there’s no sign the iconic Holden Ute will be manufactured abroad. But given the financial pressures facing car companies it’s surely a strategy all manufacturers will eventually have to explore to make sure they remain financially viable over the long term.
For more information contact:
Andrew Miller
(02) 9494 1000
amiller@sgfleet.com
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