General Motors Company (GM) announced the opening of the third shift of production at the Gravatai Industrial Complex in south Brazil. The move is likely to create 2,630 jobs. The company will employ 1,450 workers in the vehicle-assembly plant and 180 in the powertrain factory. It will also add 1,000 jobs at its suppliers at the plant.
General Motors manufactures Chevrolet Celta and Onix in the Gravatai plant. The automaker plans to start production of another small sedan in the plant. It plans to expand the capacity of the plant to 380,000 vehicles from 230,000 vehicles per year.
General Motors is focusing on the South American market, owing to the economic uncertainty in Europe and weak performance in China. In addition, Brazil contributes a significant portion of the company’s revenues from South American operation. During the first nine months of 2012, vehicles sold in Brazil constituted 60% of total vehicles sold in the South American operation.
Recently, General Motors averted a strike in the Sao Jose dos Campos facility in Brazil, by delaying the retrenchment of 750 workers till the end of the year. The company also promised to invest about $246 million at the Sao Jose dos Campos facility.
Apart from General Motors, Ford Motor Co. (F) is pursuing a major expansion plan in the mature and emerging markets including Brazil. Ford holds nearly 10% market share in Brazil. The company has four factories, two assembly plants, an engine plant and a transmission plant in Brazil.
Toyota Motor Corp. (TM) is also expanding its foothold in the emerging markets to improve sales volume. The automaker plans to launch 8 compact car models in the emerging markets including Brazil by 2015 in order to compete with the leading automakers in the market.
General Motors posted a 9.7% decline in earnings (excluding special items) to 93 cents per share in the third quarter of 2012 from $1.03 in the corresponding quarter a year ago. However, earnings outpaced the Zacks Consensus Estimate of 61 cents.
Net income ebbed 5.9% to $1.6 billion from $1.7 billion a year ago due to lower profits from North America and higher losses in Europe. Revenues grew 2.5% year over year to $37.6 billion, surpassing the Zacks Consensus Estimate of $36.3 billion. The improvement was driven by an increase in worldwide sales volume to 2.3 million units. General Motors retains a Zacks Rank #3 (Hold).
Detroit, Michigan-based General Motors is the largest automobile manufacturer in the world and one of the ‘Big Three’ U.S. automakers. The company's significant exposure to troubled Europe has adversely affected its operations in the continent.
Tesla Motors, Inc. (TSLA) is performing well in the same industry where General Motors operates. Currently, the company carries Zacks Rank #2 (Buy).
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