Despite Woes In U.S., GM Thrives Abroad

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General Motors, once the world's largest automaker, has had a rough few months. In June, the company filed for bankruptcy. Last week, as part of a massive restructuring plan, 60 percent of the company's ownership shifted to U.S. taxpayers.

However, the news isn't all doom and gloom for the U.S. auto giant. Many of the company's international operations are posting strong gains. In China, GM's second-largest market, sales jumped to 814,442 units in the first half of 2009 from 590,132 during the same period in 2008 — an increase of 38 percent. And in Latin America, seven countries set GM sales records in 2008.

Strong Market Share In Ecuador

A recent morning at Mirasol, the main GM dealership in Ecuador's southern city of Cuenca, was busy. Saleswoman Marianna Moreno spent hours at the entrance of the showroom, greeting people and fielding questions. Customers thumbed through glossy brochures and listen intently to sales pitches.

Outside, Luz Santandero looked over a Chevy pickup. She traveled almost two hours by bus to check out this particular truck.

"I've never had a car, but my husband wants one. And I think he's gotten good recommendations about the car, the brand, everything," Santandero says.

She says Chevy is by far the most popular truck where she lives and adds that she is not even considering another brand.

Mirasol is one of Ecuador's most successful GM dealers and one of a handful that has helped GM maintain a strong presence in the country. GM's market share in Ecuador is currently about 44 percent, the highest of any country in the world.

Last year was Mirasol's best in history, says Pedro Torres, the dealership's general manager. In 2008, sales grew 35 percent to $53 million, compared to $39 million the previous year.

"If we can repeat that in 2009, we'll be great," he says. Torres reports that, so far, his 2009 sales are up slightly, about 3 percent. As of June, the dealership has sold 1,322 units, compared to 1,274 units during the same period last year.

Brand Recognition, Price Key Factors

Several factors contribute to the success of operations such as GM Ecuador. First, Chevrolet — the most common GM vehicle in the country — has remarkable brand recognition, due in part to the fact that GM has had a presence here since the 1920s.

Price is another key factor, says economist Marcelo Vazquez, chairman of the economics department at the University of Cuenca. The majority of GM vehicles sold in Ecuador are in fact GM in name only. Many are assembled here, and the parts are either imported from Asia or made domestically. This gives GM an edge, he says.

"That fact means that you can count on the vehicles being affordable — which is the secret to the company's success — and relatively cheap in the local market, which has led to considerable growth in demand," he explains.

In January, the Ecuadorian government introduced a new set of import restrictions, including steep tariffs on cars. But GM, with its Ecuador-based assembly plant and parts production, remained relatively unaffected. In fact, the restrictions have allowed GM dealers to maintain lower prices at a time when imported cars are only getting more expensive.

Cautious Optimism About GM's Future

But GM's uncertain future is a concern for some. In the parking lot of Supermaxi, one of Cuenca's biggest grocery stores, Andres Pena stands near his new Chevrolet Grand Vitara, the fourth Chevy he's owned.

"My car is the Chevrolet for life," he says, adding that if Chevrolet were to disappear, he would be the first to wear black.

For his part, Torres, Mirasol's general manager, is circumspect. Given GM's uncertain future, he admits his business could change overnight.

Like many others in the industry, Torres will be closely watching General Motors as it transitions to its new life But there is a hint of optimism in his voice.

"We're seeing a new General Motors without debt, with money, with new ideas to work on, so let's see what they can do," he says.



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