General Motors Company
) revealed that it plans to invest $691 million for expanding its
Mexican operations. The expansion plan includes a new plant in
Silao in central Mexico, upgrade of an existing facility in San
Luis Potosi and the previously unannounced expansion of its
Toluca engine plant.
Of the total amount, GM will spend $349 million for a new
transmission plant in Silao that will manufacture 8-speed
transmissions, $211 million for the expansion of Toluca, which
produces V8 and four-cylinder engines and $131 million for
upgrading the next-generation transmission plant in San Luis
The combined $480 million to be spent on Silao and San Luis
Potosi plants is a part of $900 million investment plan announced
by General Motors in Jul 2011 to invest in Mexico.
The Detroit-based automaker produces Chevrolet Silverado and GMC
Sierra pickup trucks in Silao and Chevy Sonic and Captiva, and
Cadillac SRX vehicles in Ramos Arizpe; and the Chevy Aveo, Trax
and Tracker vehicles in San Luis Potosi
Mexico has become an apple of eye for many automakers due to its
numerous free trade agreements, cheap and well-educated labor and
proximity to the U.S. as well as the burgeoning demand in South
General Motors operates in Mexico for 78 years. According to the
Mexican Auto Industry Association, the automaker has the second
largest vehicle output in the country, following
Nissan Motor Co.
). It employs 15,000 people at four facilities in the country,
which is the eighth largest producer of automobiles in the world.
GM also revealed that its in-vehicle OnStar service has been made
available on some cars in Mexico. OnStar service connects drivers
to live operators for directions or emergency. It has more than
6.5 million subscribers in the U.S., Canada and China.
General Motors' plan to invest in transmissions technology is a
part of its plan to catch up with its rivals in engines and
transmissions technologies. Its competitors are already producing
10-speed transmissions when the automaker is lagging behind them
providing only six-speed transmissions in vehicles. Transmissions
with more gears are more fuel-efficient as they allow engines to
do less work.
Chrysler Group - controlled by Italy's
) -already has the license to produce the 8HP eight-speed
transmissions system (developed by Germany's ZF Friedrichshafen
AG) at its Kokomo Transmission Plant and the Kokomo Casting
plant, starting this year.
In April this year, GM stated that it has joined hands with
Ford Motor Co.
) in developing nine- and ten-speed automatic transmissions in
order to save development costs and meet fuel economy standard
mandated by the U.S. government. Further, the collaboration will
help both the companies quickly launch the transmissions into
many of their new cars and trucks.
In the same month, General Motors announced plans to invest $332
million in four plants in three Great Lakes states in order to
gain competitive advantage in terms of fuel-efficient engines and
transmission systems technologies.
The plants are located in Toledo, Ohio; Bedford, Ind.; and Flint
and Bay City in Mich. The investment at the plant will help GM
build a new V-6 engine, a new small motor and new eight-speed
General Motors has invested $10.2 billion in its North American
facilities since 2009. The company has vowed to invest $1.5
billion in its North American plants in 2013 as part of its $8
billion annual investment plan for its global operations for new
Recently, GM announced that it would invest $133 million to add a
third stamping press at its assembly plant in Wentzville, Mo. The
company will begin construction of the plant, which builds
full-size vans, in July. It expects the stamping press to be
operational by early 2015, creating or retaining 55 jobs.
Currently, shares of GM retain a Zacks Rank #3 (Hold).
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