Auto Makers Rethink Asia Expansion
DETROIT (AP) _ The turmoil across the Pacific is prompting the Big Three automakers to rethink their expansion plans for Asia: Instead of opening new plants, they are investing in Asian-owned factories.
Asian factories have suddenly become cheaper since the region’s currencies plummeted. Also, sales in Asia are falling, leaving less need to build new factories.
General Motors is delaying plans to open a plant in Thailand, but on Friday said it is willing to invest more in Indonesia now that the country has halted tax breaks for a national car program run by President Suharto’s son. GM also recently bought the remaining 40 percent stake of a company that assembles Blazer trucks in Indonesia.
Ford Motor Co. expects to produce fewer one-ton pickup trucks in Thailand starting next May because currency troubles have lessened demand.
Chrysler sales in Asia will be significantly lower than the 65,000 in 1997 because of the currency troubles. ``People are just not buying cars,″ spokeswoman Jodi Armstrong said.
In addition to delaying start of its Thailand project, GM spokesman Mike Meyerand said the company might build a smaller, cheaper model than previously planned because of the economic troubles.
GM has also been talking with South Korea’s Daewoo and other South Korean companies about acquiring all or parts of their operations, Meyerand said.
Ford Chairman Alex Trotman said the No. 2 automaker also is looking for such opportunities with currencies in the region weak.
In the United States, meanwhile, the Big Three are facing stiff price competition that could hurt revenue.
Weak Asian currencies make Asian cars cheaper in this country. That has put U.S. automakers under increased pressure to hold down their own prices and keep offering incentives to car buyers.
To compete, the U.S. automakers plan to boost rebates and low-interest loans if necessary. That’s bad news for companies like GM., which spent $1 billion more than it planned on incentives in 1997.
``Frankly it gets quite expensive,″ said G. Richard Wagoner Jr., head of GM’s North American operations.
GM has extended to April an incentive program that was supposed to expire Jan. 5. Consumers can get $750 off or 4.9 percent financing on a Chevrolet Cavalier, and $1,000 off or 3.9 percent financing on a Chevy S-10 pickup.
Ford’s Trotman said autos in the United States this year may have their lowest-ever price increase.
``The reality,″ he said, ``is that the weakened Asian currencies are going to change the competitive dynamic for all of us in 1998.″