GM Eyes China to Compensate for Setbacks in Ireland

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Nov 03, 2014
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General Motors (GM, Financial), the leading car-maker in the U.S., has not been doing well as of late. In a recently announced press release, the company reported a nose dive in profits by a steep 36%, most of which has been attributed to the poor performance in Ireland. The distributor of Opel vehicles in Ireland fell by 36 percent to 510,000 Euros last year, despite a 25 percent rise in sales to 88 million Euros. In the latest account statement released by the company, pre-tax profits of the company has gone down to 510,000 Euros from 794,000 Euros in 2012. For the record, the company has a market share of 6.2% in the combined new passenger car and commercial vehicle market.

The company increased its staff members at the Irish facility significantly in 2013, riding on the hopes from the restructuring of its global IT operations. A total of 43 new IT staff has been hired aboard at the Irish operation as part of the move, according to a spokeswoman. Wages and salaries cost rose from €1.1 million in 2012 to €3.5 million last year. Directors’ remuneration – salary and pension contributions – for the year rose from €292,000 to €303,000.

The turnover report also includes incomes from part sales in late 2013. This, as a result, shows that the incomes went up 5.4 percent on the previous year to approximately 10.7 million Euros. The company plans to further increase this by reducing the number of older vehicles in the Irish fleet. The company sees that this might lead to an increase of approximately 9 million Euros. The directors’ report states that while the firm had a 6.2 percent market share in 2013, its medium term objective is to have a sustainable 8 percent new vehicle share.

The company is battling to capture the Chinese car market, as it struggles to keep pace in Ireland. GM is the latest giant to take the plunge in the Chinese market for dominance. The industry experts expect that the company will do well to capture the market and also increase the Chinese sales of its Cadillac and increase its overall sale by around 40%. The company also plans to introduce nine new Cadillacs in China over the next five years. The company’s China President said, “We’re very optimistic about the luxury market, we believe that the luxury market by 2016 here will become the largest luxury market in the world, surpassing even the size of luxury in Europe,” he said.

The company continues to be in a tussle with arch rivals Volkswagen. Last year, Volkswagen ended GM’s nine-year reign as China’s top-selling foreign automaker. GM announced that it would spend $12 billion (€9.5 billion) up to 2017 to increase capacity and expand its product line in China, and it foresees the Chinese buying between 33 million and 35 million vehicles a year by 2020. The company is also planning to reorganize its luxury brand as a separate unit based in New York. According to a survey conducted in China, most of the users of VW have expressed interests to switch brands on purchasing their next car. The car maker must take a cue from this and make full use the opportunity. The experts have predicted that if GM manages to regain its position in the Chinese market (which they are pretty confident about), there’ll be a high chance of the company bouncing back strong in the next quarter.

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