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GM Focuses on Indonesia & Thailand

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General Motors Company (GM - Analyst Report) plans to expand its dealerships in Indonesia and Thailand in order to tap growth opportunities in the two markets with rising income levels. The company’s head of Southeast Asian operations, Martin Apfel, revealed that the company plans to increase the number of dealerships to 55 from 35 in Indonesia and to 120 from 91 Thailand by the end of 2013.

The Detroit-based automaker intends to make up for the sluggish sales in other markets including the U.S. and Europe, by expanding its operations and opening up manufacturing bases in the two countries.

GM quit the Indonesian market in 2005 by closing a small assembly plant in Bekasi city, located in West Java on the eastern border of Jakarta due to a financial crunch. However, the automaker reactivated the plant in 2011 in order to strengthen its position in the market dominated by Japanese automakers.

GM anticipates nearly five-fold increase in sales in Indonesia by 2014 as its Bekasi plant would be geared up to produce about 50,000 vehicles annually. For now, the company plans to manufacture a seven-seat multipurpose vehicle (MPV) Chevrolet Spin at the plant, aimed at both the local market and other markets in Southeast Asia such as Thailand and the Philippines.

Last year, GM’s Chevrolet brand sales in Indonesia jumped 72%; however, it occupied less than 1% of the market. Meanwhile, the company’s Chevrolet sales in Thailand more than tripled to 59,652 vehicles in the first 10 months of the year, led by Colorado pickup truck.

GM’s cross-town rival, Ford Motor Co. (F - Analyst Report) is also pursuing a major expansion plan in Asia, including China, India and Thailand. The company expects that the continent will account for 70% of its global growth in the next decade, mostly from China and India. It also anticipates Asian sales volumes to double and account for a third of its global sales by 2020.

GM, a Zacks #3 Rank (Hold) stock, posted a 9.7% fall in earnings to 93 cents per share (excluding special items) in the third quarter of the year from $1.03 in the corresponding quarter a year ago. However, earnings per share in the quarter far exceeded the Zacks Consensus Estimate of 61 cents.

Revenues in the quarter grew 2.5% to $37.6 billion, surpassing the Zacks Consensus Estimate of $36.3 billion. Worldwide sales volume inched up 1.6% to 2.3 million units from 2.2 million units a year ago. However, total market share declined to 11.6% from 12.1% in the third quarter of 2011.

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