The Middle East head of General Motors, the US car maker pleading for government loans to save it from bankruptcy, is bullish about its growth prospects in the region, but warns that credit must get easier. Mike Devereux, the newly appointed president of GM in the Middle East, said while sales were up year-on-year in the region, they had slowed in the past two months because of tight credit markets.
He said this problem was not helped by markets such as the UAE, where 70 per cent of GM vehicles were bought on credit. "In the Middle East, the approval rates on consumer credit have gone down dramatically in the last 65 days," Mr Devereux said. "Rejection rates used to be five per cent, and now they are 25-30 per cent." He said GM was talking to its local dealerships to find solutions to the regional credit crunch, instead of dealing directly with GCC governments.
A week ago, the heads of the Detroit motor industry - GM, Ford and Chrysler - asked the US Congress to provide US$25bn (Dh 91.83bn) in bridging loans because of their inability to secure financing. Congress will vote on the loan next month, after asking the car makers to come up with a plan for reform and cost-cutting. Despite the slowdown, Mr Devereux said GM sales in the UAE were already 28 per cent higher year-on-year - in the first 10 months of this year, sales in the UAE had already reached 19,500, up from 15,250 in the first 10 months of last year.
In the Middle East as a whole, GM sales are up 13 per cent for the first 10 months of 2008, year-on-year. Job cuts were not on the cards at GM in the Middle East, he said, but rather there were positions to fill. "We have 220 people at the Dubai World Trade Centre, and we're not cutting any there, as with our distribution centre at Jebel Ali," he said. "We've got a number of positions to be filled next year, and we're continuing to invest here."
While the Middle East makes up just under two per cent of GM's worldwide sales - 150,000 units out of a global total of 9m - Mr Devereux highlighted the importance of the region. Because of declining sales in its domestic market, GM this year moved production of its 4x4s, such as the Hummer, to one factory in Arlington, Texas. Mr Devereux said a quarter of the factory's output now goes to the Middle East.
He said 60 per cent of GM sales now came from outside the US "Outside of the US we have markets like the Middle East, China and Russia which are real growth markets for GM - the last thing we can do is cut back on those places which are very good for us." firstname.lastname@example.org