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GM Mideast not affected by cutback plans in the US

General Motors ' plans to cancel contracts with more than 1,000 dealers in the US will not have any ripple effect on the car giant's operations in the region, according to a top executive.

"We will not be affected at all," Mike Devereux, President of GM Middle East , told Emirates Business. "The decision to cancel contracts with 1,100 dealers is limited to the US and is part of the company's viability plan to ensure long-term profitability and success.

"The plan has four elements. The first is reducing the number of core brands to four - Chevrolet, Cadillac, GMC and Buick. The second is the restructuring of GM's US dealer network, including the cancellation of some of these.

"The third element is improved capacity utilisation from a plant and people point of view. The last element involves lowering structural costs to reach a break-even point of approximately 10 million cars, the estimated size of the US market this year, down from a 16 to 17 million."

A spokesman for Gargash Motors , the sole distributor of GM's Saab brand in the UAE, said he did not believe his company's operations would be affected by decisions taken in the US.

"GM is reducing its dealers all over the world," said General Manager Jonathan Greenslade. "However, this is not expected to affect us in any way. We are the only one dealer for Saab in UAE and that leaves no scope of cancellation. The region is still too small for cancellations. However, we may see certain franchises moving to different owners.

"Dealers around the world are seeing falling demand. It's been terrible for the entire car industry. Sales have gone down 30 to 40 per cent. Financing is difficult to come by these days. As far as the UAE is concerned demand is falling. On a global level there are far too many cars being produced."

He said nearly 94 million cars could be produced this year - but demand amounted to just 50 million.

"The world can't absorb so many cars and somebody will have to loose out. We can expect to see a reshuffle of the motor trade, something that happened 10 years back. This will result in one automobile company acquiring brands from other companies."

Devereux said GM's performance in the Middle East was better than elsewhere.

"As far as performance is concerned, the global financial crisis is not limited to one country or one industry," he added. "Obviously it has hit the Middle East. However, the prospects for mid and long-term growth remain very solid here in the region.

"The overall car market was down by 21 per cent in the region GCC, Levant and Iraq in the first quarter of this year. Our sales were down by just 19 per cent, and this means that we outperformed the industry and gained market share."

The company is still coming up with new models despite the downturn.

"The good news is that our launch plans are on track," said Devereux. "We have already launched the Chevrolet Traverse and ZR1, the world's fastest sedan, the Cadillac CTS-V and the GMC Sierra Denali.

"The highly anticipated Camaro and the all-new global compact car from Chevrolet, the Cruze, will both be in the showrooms in early July as 2010 models, while the award-winning Chevrolet Malibu arrives to the showrooms in October. Also in October we launch the all-new GMC Terrain and all-new Cadillac SRX."

GM announced last Friday that it is going to cancel contracts with 1,100 dealers in the US. The dealers will have until late 2010 to wind down their businesses and notices have been sent to the affected dealers individually.

By Shuchita Kapur

© Emirates Business 24/7 2009