GM Argentina Says It Is Solid, Unaffected By Bankruptcy In US
02 Juni 2009 - 8:46PM
Dow Jones News
The Argentine unit of General Motors Corp. (GMGMQ) is sound and
unaffected by the U.S. company's decision to file for bankruptcy
Monday, the division said Tuesday in a statement.
"GM Argentina is a legally distinct entity, and is economically
and financially solvent thanks to our healthy balance in the
region," GM Argentina said in a statement posted online.
GM's Latin American operations, including its business in
Brazil, appear to be one of the few bright spots for the U.S.
automobile maker.
GM Argentina President Edgar Lourencon told local media Monday
that the company's operations in Argentina and Brazil accounted for
60% of the $1.3 billion in profit generated by the company's Latin
American units last year.
"GM Argentina maintains its commitment to invest in the country,
developing a new compact regional model in our Rosario industrial
plant whose production will begin towards the end of 2009," the
company said.
In 2007, then GM Chief Executive Rick Wagoner announced plans to
invest $500 million in Latin America. The plan called for investing
$400 million to develop the new product line, which would be sold
in Latin America and exported to other emerging market
countries.
The investment was to be divided between GM's Rosario plant in
Argentina and the Sao Caetano do Sul plant in Brazil, with each
plant receiving about $200 million to modify and expand production
lines for the new vehicle.
Lourencon said Monday that GM will receive fresh funds from the
Argentine government to help carry out the originally announced
plan for the Rosario plant.
Argentine President Cristina Fernandez is expected to announce
that the government will provide around $55 million in funding to
help GM develop a new small vehicle.
Multiple media outlets have reported that Italy's Fiat SpA
(FIATY) has offered to take over GM operations both here and in
Brazil. A spokesperson for GM Argentina declined to comment about
such an offer and Fiat Argentina couldn't be reached for
comment.
Despite GM Argentina's strength relative to its parent, the
company has suffered from Argentina's economic slowdown and a sharp
decline in demand for new cars.
Argentina's auto sales fell 29.17% in April compared with the
same month a year ago, according to the car dealership association
Acara. April's decline was more than triple the annual decline seen
in March, when sales fell 8.7%.
Meanwhile, Argentina produced 37,262 cars in April, down 31.8%
on the year, according to the automotive manufacturers association,
or Adefa.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728;
taos.turner@dowjones.com