GM sees booming business in So. America longterm

--------------------------------------------------------------------------------

By QUITO, Ecuador, Sept 20 Carlos Andrade Garcia writing for Reuters reported that despite economic turbulence in Argentina and Brazil, General Motors Corp. <GM.N> sees a booming market for car and truck sales in South America -- but only for those willing to hang on for the long haul.

The Detroit automaker expects South American sales to dip slightly to close to 500,000 units in 2002, with turbulent presidential elections in Brazil and Argentina's economic woes weighing down the Southern Cone.

But through August this year, the company had boosted its market share in the region to 23.6 percent -- its best performance in 12 years -- versus 22.1 percent in the same year-earlier period.

The company says it won't hold back amid these troubles and rather plans to expand its buyer base and offer new products, banking on a possible surge in recovery in the region as soon as 2003, said Maureen Kempston Darkes, president of GM's division for Latin America, Africa and the Middle East.

"During the next seven years, emerging markets will make the automobile industry grow 45 percent, versus 5 or 10 percent in the wealthiest markets," Kempston Darkes told Reuters in a recent interview on a visit to Quito.

"As a result, we think that Latin America will show significant growth and we want to be here to be a part of it," she said.

In the first eight months of 2002, GM sold 319,000 new cars and trucks in the region. For all of last year the company sold 511,000 units across the region, which bought a total of 2.2 million cars and trucks.

But the shadow cast over Latin America has yet to brighten, economists say. The U.N. Economic Commission for Latin America and the Caribbean, based in Santiago, Chile, expects the regional economy to contract 0.8 percent this year.

The Inter-American Development Bank expects Latin America's economy will grow 3 percent next year, versus a 1.3 percent contraction forecast for 2002.

INDUSTRY SUFFERS

Kempston Darkes said key areas of concern for 2002 include Argentina, Venezuela and Brazil, which have seen overall vehicle sales plummet during the first eight months of the year compared with the same year-earlier period.

In crisis-ridden Argentina, industry sales have dropped 50 percent, in Venezuela 40 percent and in Brazil 15 percent, she said, adding that she hoped the industry would start showing improvement next year.

"I think there is an opportunity here, that as we finish 2002, we will see some recovery," she said. "We think that a certain stability will return to the region" in 2003, she added.

GM has managed to hang onto and even improve its market share in South America by introducing new products, such as five new vehicles in Brazil this year, a company spokeswoman said.

In Ecuador and Colombia, Kempston Darkes said GM's business ias showing rapid growth. The company expects to sell about 60,000 units in the two countries this year.

GM has operations in Argentina, Brazil, Colombia, Ecuador, Mexico, Paraguay, Uruguay and Venezuela.