General Motors Company's
) Chinese joint venture, SAIC-GM-Wuling, plans to assemble
automobiles in Egypt using kits imported from China. The move will
help the automaker compete in the Egyptian market targeted by
domestic car exporters in China.
SAIC-GM-Wuling manufactures mini-vehicles including minivans and
small cars. The joint venture plans to launch a new van, Chevrolet
Move, in Egypt, which will help GM expand its market and improve
Production of Chevrolet Move is expected to begin by the third
quarter of 2012. GM plans to produce nearly 5,000 Moves per
Currently, GM sells Chevrolet lineups and Opel lineups in Egypt
through its joint venture, General Motors Egypt S.A.E., jointly
owned by the company (31%), Japan's Isuzu Motors (20%), some
Egyptian investors (33%) and some Saudi investors (16%).
Among the vehicles sold by the joint venture, Chevrolet N Series
and Opel Astra are imported in Egypt and sold domestically and in
other African markets, (including Chevrolet N200 van that is
imported from China).
The joint venture operates an assembly plant in the 6th of
October City in Egypt. It was set up in 1985 and revolutionized the
automotive industry in the country.
The Egyptian automotive market began to expand since 2004. The
vehicle sales in the country are expected to increase from 72,417
units in 2004 to 444,000 units by 2012.
Exports of China-made vehicles dwindled until last year due to
surging local demand. In 2010, exports of those vehicles accounted
for a meager 3% of 18.3 million vehicles produced in China. The
percentage is far behind South Korea, Thailand, India and
However, local demand began to soften this year with the
withdrawal of tax incentives and subsidies supporting sales of
compact and energy efficient vehicles, triggering a growth in
According to China Association of Automobile Manufacturers,
exports soared 57% in the first half of the year to 454,400
vehicles. The country's top export markets included Algeria,
Russia, Brazil, Vietnam and Chile.
GM Results and Outlook
In the third quarter of 2011, GM posted an 11% decline in profit
to $1.74 billion from $1.96 billion in the same quarter of 2011.
Nevertheless, on a per share basis, the profit of $1.03 was higher
than the Zacks Consensus Estimate of 99 cents. It compared with
$1.20 in the third quarter of 2010. The decline in profit was
attributable to lower interest income and other non-operating
income (net), loss on extinguishment of debt and income tax
Meanwhile, GM's hometown rival
Ford Motor Co.
) fared well by posting a narrower 3.5% fall in profit to $1.85
billion in the quarter from $1.91 billion in the same quarter of
prior year. However, on per share basis, earnings were 46 cents
versus 48 cents a year ago, beating the Zacks Consensus Estimate of
44 cents. The decline in profit was attributable to fall in
commodity prices and anticipated reductions in Financial Services
GM, a Zacks #3 Rank (Hold) stock, had to seek bankruptcy
protection in 2009 due to unfavorable economic conditions and a
rapid decline in sales. However, the automaker recouped its sales
and earnings by banking on the emerging markets, economic recovery
and improved cost structure. The company completed its IPO at the
end of 2010, through which, it has repaid $23.1 billion to the U.S.
Based on the current industry outlook, the automaker expects an
adjusted EBIT in the fourth quarter of the year to be similar with
the fourth quarter of 2010 due to seasonal trends in North America
and ongoing weakness in Europe. However, it anticipates the
adjusted EBIT for 2011 to show solid improvement over 2010.
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