GM (NYSE: GM) has decided that China is not the only developing market with promise. It is stepping up an alliance with Isuzu to build trucks in South America, one of the fastest growing vehicle markets in the world.
As the road infrastructure in South American improves and manufacturing prospers, the need for cars and light trucks is expanding. The head of GM's unit which overseas Latin American said that revenue growth there could increase by several billion dollars a year between now and the end of the decade. GM recently said it would invest $500 million in plants in the region.
While sales in North America are troubled, GM also faces challenges in China. A number of large car companies are attracted by the size and growth rate of the big Asian company. VW is already one of the biggest car makers there and Toyota (NYSE: TM) and Honda (NYSE: HMC) are increasing their presence.
Latin America may be GM's best single opportunity to pick-up unit sales and profits in the next two or three years.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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