no plans to sell GM operations in Brazil, or anywhere else in Latin America, Africa and the Middle East," said Jaime Ardila, the chief executive officer of General Motors do Brasil Ltda.
The crisis is localized on the dark spots of the world economy: US, Europe and Japan.
Countries within the Demographic Window will prod on relentlessly
More Than Ever, Brazil Is Part Of General Motors' Future
June 02, 2009: 03:17 PM ET
SAO PAULO -(Dow Jones)- Although General Motors Corp. (GM) filed for bankruptcy protection this week, its Brazilian assets aren't on the chopping block, a regional executive said Tuesday.
"There are no plans to sell GM operations in Brazil, or anywhere else in Latin America, Africa and the Middle East," said Jaime Ardila, the chief executive officer of General Motors do Brasil Ltda. and chief financial officer of GM's Latin America, Africa and Middle East division, or GM LAAM.
After months of uncertainty, the Detroit automaker sold a majority stake to the U.S. government in order to keep itself in business. Its LAAM division is one of its most profitable. GM LAAM, of which Brazil is the largest subsidiary, saw 2008 sales rise around 3% compared with a 20% decline in GM's North American car sales.
GM's bankruptcy filing marks the end of months of speculation regarding the future of the company, not only in the U.S., but in more profitable markets around the world.
Fiat SpA (FIATY) made an offer to buy General Motors' Opel division in Europe. Opel was later sold to Canadian auto parts maker Magna International Inc. (MGA) instead. Fiat still would like to buy GM operations in other countries, but GM is no longer interested in selling, Ardila said.
"The U.S. government is going to hire a new board of directors and we will all sit down and go from there. What happens from there, depends on the new shareholders," he said.
Speaking to reporters at GM's offices in Sao Paulo, Ardila said that, with car sales on the upswing in Brazil, the country is one of the most profitable markets for the new GM and the Chevrolet brand.
"We had a great 2008 and will have a lucrative 2009," Ardila said.
ELMAT: Nice Intra company competition!!
"Right now, we are not part of any bankruptcy proceedings. General Motors in Brazil is financially independent," he said.
"If we need money, we have open credit lines here with local banks that we can tap," he said, citing banks like Bradesco (BBD), Banco Santander (STO), Banco do Brasil (BBAS3.BR) and the Brazilian National Development Bank, BNDES. The last time General Motors do Brasil Ltda. tapped headquarters for financing was in 2005.
The company has a planned $2.5 billion in investments through 2012, with $1 billion already invested and $500 million in the works. Another $1 billion will come from GM Brazil resources and local banks, although financing hasn't yet been finalized, he said.
Claire Gruppo, managing director of investment bank Gruppo, Levey & Co. in New York, said GM's new owners will strive to do whatever it takes to raise capital for U.S. operations.
"GM will have to look at everything they have and sell whatever they can to protect their core market and that is the U.S., not Brazil," she said.
For now, GM in Brazil is still part of the new GM and Ardila expects that it will be a key partner in the company going forward.
"GM subsidiaries abroad will remain independent as General Motors in the U.S. turns inward," Ardila said.
"It's not a problem for us in Brazil. We are still in very good shape," he said.
The company sold around 48,000 vehicles in Brazil in May, up from around 35, 000 in April. Despite a severe economic slowdown in Brazil, car sales have been on par with sales in 2008, which was a record-breaking year. Late in 2008, the Brazilian government gave car makers a temporary break on industrial production taxes, resulting in lower new car prices.
"The market is improving for car sales and that is ultimately good for the Chevrolet brand and GM," Ardila said. |
