SINGAPORE - China's automotive market will reach saturation point in the near future, leaving the rest of Asia and Africa as the only major growth areas.
American automotive giant General Motors (GM) cited this as a reason for re-establishing a regional headquarters in Singapore - 10 years after relocating to Shanghai.
GM international operations president Stefan Jacoby told The Straits Times at the official opening of the office yesterday: "When we moved out of Singapore for China, we were not the only ones that moved. Many in other industries also moved. But things have changed. China has grown so big and become so important that it needed its own dedicated management."
That means GM needed a set-up outside China to focus on the next growth regions.
When GM left Singapore for Shanghai in 2004, it envisioned Chinese sales to grow by 40 per cent to 280,000 units that year.
Last year, it sold nearly 3.2 million vehicles there - more than in America, its home market.
"At some point, China will become satisfied, and will then be a developed market, like Europe and America," Mr Jacoby said.
"And the markets that will grow will be ASEAN, India and Africa," he added.
GM sells 800,000 to 900,000 vehicles a year in these regions, but Mr Jacoby would not say what number he is gunning for in the medium term.
"Rather than volume, we want to focus on returning to profitability," he said.
The auto giant has been affected by the unrest in Thailand. Mr Jacoby said the Thai vehicle market had shrunk from 1.4 million units in 2012 to around 850,000 last year.
"We were hit hard," he noted.
Political stability, good infrastructure and a sizeable talent pool were reasons GM picked Singapore as regional HQ over other cities, Mr Jacoby said. "Singapore is stable and transparent... the only other option for us was Dubai, but it does not have the talent pool Singapore has."
The Singapore office in OUE Bayfront - which will be responsible for nearly 100 markets in Africa, South-east Asia, Australia, India, the Middle East and South Korea - will have around 200 people by the year end, up from 120 now. They include 25 transferred from the Shanghai office and 45 expatriates.
"We intend to localise many of these expat positions," Mr Jacoby said, adding that it will be hiring 100 people from Singapore.
The regional HQ will serve functions such as information technology, finance, product planning, logistics and purchasing. It will continue to run a parts logistics centre here but will not distribute vehicles.
Mr Jacoby said: "The main difference (from its last office here) is that we will have a much better grip of our markets... and we will raise the level of localisation."
He said GM will launch 40 new models in the region from now until the end of next year.
Economic Development Board (EDB) deputy managing director Quek Swee Kuan said at the opening ceremony that the auto giant was well positioned to capitalise on regional growth markets. Citing an EY report, he said Asia will account for two-thirds of the world's middle class by 2030.
He also reiterated that Singapore aims to grow its automotive sector, including the supply of components and research and development.
This article was first published on August 6, 2014.
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