GM's Dan Ammann asserted that Japanese automakers are benefitting from a weak yen in Southeast Asia and Australia.
The devaluation of the yen is clearly helping Japanese carmakers in the Southeast Asian and Australian markets, General Motors’ chief financial officer said.
GM CFO Dan Ammann also said the decline in the value of the yen has created new competitive challenges for GM in markets such in Southeast and Australia.
“We’re seeing more pressure in those markets than in the U.S,” he said during an industry conference in Traverse City, Mich.
Speculation about the yen’s devaluation, which has made Japanese-made vehicles less expensive, has soared ever since the Japanese Central Bank began a systematic devaluation of the yen in an effort to boost the Japanese economy. The impact of the devaluation has been muted in the U.S. because Japanese carmakers produce substantial numbers of vehicles in North America.
“Australia is an open market. Local production has been more and more challenging. Most competitors operate on an import basis,” Ammann said, adding that as the value of the yen has declined, vehicles imported from Japan have gained market share.
Ammann said GM recently ended the distribution of Opel-built vehicles across Australia and going forward will only sell vehicles under the Holden brand because of the difficulty of being competitive in that market. Opel couldn’t keep pace with discounts made by its rivals. In 2012, it sold just 541 vehicles and 989 in the first six months of this year.
The market in China, where GM is now the top automaker, remains GM’s most significant opportunity for growth.
“Obviously we’re enjoying an up cycle in the market in the U.S. in particular,” he said. “The focus we have is to sustain for the long term,” added Ammann, who declined to discuss issues such as the recent dismissal of employees in India because government-required emission tests had been falsified. He also dismissed questions about the recent departure of several senior managers since last winter.
“It’s a natural evolution, you find at the top of any large company,” he said. Earlier this week, Don Butler, a veteran GM marketing executive who was in charge of the effort to boost Cadillac’s international sales, resigned.
Ammann said GM’s basic strategy for winning and retaining customers requires introducing vehicles that are “winners” in their segment. The values also have to have to offer a compelling value proposition as well as top-notch quality.
“Our success will be wholly dependent on our ability to retain customers over the long term,” Ammann said.
“We’re not expecting a favorable pricing environment going forward,” he said. But GM’s profit margin will improve as the company reveals more new products. “We had the oldest product portfolio in the business,” he said.
(Nissan profits come from weak Yen. Click Here to read more about it.)
He also touched on the company’s shareholder plans in the near term during a recent breakfast with reporters.
(Click Here to read more about American automakers concerns about Trans-Pacific pact.)
“We’re not paying a dividend at this point,” Ammann said. “It’s something we expect down the road.”
GM, which is still partially owned by the U.S. government, stopped paying dividends during its financial crisis in 2008, which ultimately led to the company filing for bankruptcy in 2009.