GM's Indonesia closure highlights automakers' emerging markets woes

Thu Feb 26, 2015 3:41pm EST
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By Bernie Woodall

DETROIT (Reuters) - General Motors Co's (GM.N: Quote) decision to shutter a car factory in Indonesia comes as global automakers rethink the timing and scope of investments in emerging markets once touted as engines of growth.

Global automakers poured billions into Brazil, Russia, India, China and other emerging markets during the past few years. For now, some key emerging markets are a drag on sales and profits.

Ford Motor Co (F.N: Quote), General Motors Co (GM.N: Quote), Toyota Motor Corp (7203.T: Quote) and Korean automakers Hyundai Motor Co (005380.KS: Quote) and Kia Motors Corp (000270.KS: Quote) said slumps in Brazil, Russia, India and other emerging markets dented profits last year.

Ford took an $800 million one-time charge to fourth-quarter earnings in an accounting change because of the volatile currency in Venezuela. GM wrote down $194 million of the value of its assets in Russia, and cut production there.

Toyota says vehicle sales in Asia fell 11 percent in the latest quarter, mainly because of weak demand in Thailand and Indonesia.

India has suffered a two-year decline in sales since Ford and Renault-Nissan announced big investments in the country.

Fiat Chrysler Automobiles NV had planned to launch its Jeep brand in India in 2013. Now, the company says it plans to wait until the third quarter of this year.

“India is just waking up,” says Vikas Sehgal, global head of automotive at investment bank Rothschild.  He says India will grow in the long run.   Continued...

The General Motors world headquarters is seen in downtown Detroit, Michigan May 31, 2009. REUTERS/Rebecca Cook