Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (303)	5/8/1998 4:29:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

GM sees Ecuador as base to expand. By Mario Naranjo QUITO, May 8 (Reuters) - U.S. auto giant General Motors plans to boost its production in Ecuador to use the country as a base to expand into Peru, Bolivia and Central America, the head of the company's local unit said. ''We are trying to consolidate our plans, strengthen new models, reach new markets and expand in our own market,'' Jaime Ardila, General Motors' president in Ecuador, told Reuters. GM recently increased its stake in Ecuadorean auto manufacturer Omnibus BB to 52 percent from 34 percent. Omnibus, a joint venture between GM, Japanese auto firm Itochu (8001.T) and the military, manufactured 51.6 percent of all the 24,957 vehicles made in Ecuador in 1997. ''We are already operating in Colombia and Venezuela, but we have been made responsible for reaching markets in Peru and Bolivia too,'' Ardila said in the late Thursday interview. Currently, Omnibus BB only exports its Chevrolet-brand cars to Venezuela and Colombia, placing 32 percent of its annual production last year in those markets. Mazda (7261.T), Toyota (7203.T) and Chrysler (C - news) cars are now available in Ecuador. GM has 43 percent of the market. Ardila said GM hopes to continue reaching new markets after its first initial Andean expansion. ''We want to begin with other markets. We are interested in Central America and Mexico as well, but those are future plans.'' In order to enter the Peruvian and Bolivian markets, Ardila said certain regulations must be met by his company. ''The Andean Group requires 35-40 percent of components to be manufactured locally in order to meet rules of origin. We are within that range,'' he said. He expects to enter the two markets by the end of 1998 or mid-1999, placing GM in all of the countries making up the Andean Community trade group, home to 100 million consumers. ''Our strategy is over many years due to our production cycle,'' explained Ardila. ''The plan is laid out for three years, but it is revised every year.'' In case the company's expansion plans raise demand, Ardila signaled that Omnibus BB was capable of increasing production by 70 vehicles per month in an eight hour a day work shift. ''The capacity in one shift is tied to the needs of our local market and exports, but if demand increases, we have the capacity to grow,'' he explained. ''The plant is working at almost 100 percent capacity in one shift. There's always the possibility of another shift.'' According to Ardila, Omnibus BB's corporate focus will remain unchanged since GM was already a shareholder. ''The only thing the (share increase) changes is that it strengthens Omnibus BB's position as GM's unit to consolidate its position in Ecuador,'' he said. However, he is aware of the difficulties he could be facing soon from other car makers, especially those from Asia. ''The market is fine now, but it will worsen because all of the brands are present. Until now, the market has been strong,'' he said. Not only is the Ecuadorean market expecting a downturn, but so are the Colombian and Venezuelan markets, which have both been hit by lower oil prices and pre-electoral nervousness. ''Colombia's and Venezuela's markets have suffered under similar circumstances as Ecuador,'' Ardila said. ''However, our plans for exports have not changed. The demand in those markets remains.''