Sep. 03, 2008  From http://english.autoinfo.gov.cn 

General Motors does not expect U.S. sales to revive this year as the credit crunch pressures consumers, with a senior official saying the top priority was to turn around the North American business.
    
    GM, which has lost $51 billion over the past three years, will continue to invest in emerging markets such India and China and was on track for full-year profit growth in Asia, officials said.
    
    "The most important thing we can do is to turn around the North American business," Chief Operating Officer Fritz Henderson told reporters after inaugurating the leading U.S. carmaker’s second plant in India. The factory in the western Maharashtra state has an annual capacity of 140,000 units.
    
    "We do not have a huge amount of optimism for the rest of the year as the pressure on consumer continues," Henderson said.
    
    The troubled carmaker has been under increasing pressure to cut costs and raise capital because of the slump in U.S. auto sales that pushed its first-half sales down 16 percent.
    
    GM last week said it was offering early retirement incentives to about 28 percent of its U.S. salaried work force as part of its effort to reduce payroll expenses and conserve cash.
    
    GM’s U.S. operation employs 32,000 salaried staff. GM has said it would cut white-collar costs by 20 percent as part of its effort to reduce overall costs by $10 billion and shore up cash.
    
    Henderson said he was fairly confident of raising the required capital through secured borrowings and asset sales.
    
    Hi gh fuel prices, a consumer shift away from low-mileage trucks and the weakest U.S. auto sales in a decade have increased investor doubts about GM’s ability to ride out the downturn, although Asia-Pacific is a bright spot.
    
    "We are on track for full-year profit growth in Asia despite the hit we took in Q2," Nick Reilly, president for the region said.
    
    INDIA INVESTMENT
    
    Having invested more than $1 billion in India, GM is aiming at a 10 percent share by 2010, when annual passenger vehicle sales in the country are expected to hit more than 2 million units.
    
    "It is clear that for us to remain a global leader, we must be a leader here in India. The India plan will be an important part of GM’s global manufacturing network," Henderson said.
    
    Maruti Suzuki, Hyundai Motor Co. and Tata Motors Ltd. dominate the fast-growing and increasingly competitive Indian market, where small cars are favored.
    
    GM, which makes the Chevrolet-badged Tavera, Optra, Aveo and Spark in India, will build a new small car at the new plant.
    
    The car is expected to launch in the second half of 2009 and would be priced between $3,000 and $5,000, meaning it would not be a direct competitor to Tata Motors’ Nano, billed as the world’s cheapest car at about $2,500 and scheduled for launch around October.
    
    India’s top car maker Maruti, 54.2 percent owned by Japan’s Suzuki Motor, also said it does not plan a Nano competitor as it expected rising incomes and changing lifestyles to increase demand for we ll-designed and feature-rich compacts.
    
    But Bajaj Auto is working on a competing ultra-low-cost car with Renault and Nissan.
    
    "The market has potentially opened for a $2,500-3,000 car while the earlier threshold was $5,000. We are not going to have Tata have that complete segment," GM’s Reilly said.
    
    Tata Motors, which bought Jaguar and Land Rover from Ford Motor Co. for $2.3 billion this year, said on Tuesday it would raise $935 million in two rights issues for early repayment of some of the short-term funding of the deal.

(Editor: Irene Lu)