There’s a post over at the Automotive.com blog that discuss an article about General Motors looking into entering the small car market globally.

There’s a post over at the Automotive.com blog that discuss an article about General Motors looking into entering the small car market globally.

We’re torn about such a move. On the one hand, we can see why the world’s largest automaker is considering it. Demand for vehicles in less developed countries such as Asia, South America, and Eastern Europe is quickly rising as the standard of living increases in those countries and the consumers have more disposable income. On the other hand, the economies are not equivalent to the more developed nations and vehicles take a different meaning. Cars, in such countries, must not only be more durable, flexible, and rugged, but inexpensive. Toyota, arguably the most successful automaker in the world and, especially, in the U.S., is having difficulty in such countries as India and China since its chief strengths, quality and reliablity, is too costly for such countries. Hyundai, on the other hand, has proven more successful.

GM could build such vehicles. It will definitely have to outsource them, though, through other, smaller automakers. Though the languishing factories in the U.S. have more than sufficient capacity to build such vehicles, the costs would be prohibitive, and GM would lose money on each vehicle manufactured. GM Daewoo affiliate could be tasked to build such a cheap car: it already builds the Aveo.

But should GM pursue such a path? Right now, GM’s Buick branch is extremely successful in China and we’re wondering, using it as an example, if it would be more cost effective for the automaker to pursue more lucrative markets. BMW and Audi sell high-end vehicles which make more more profit per vehicle sold than in numbers like Toyota or Nissan. Ignoring the Cadillac BLS current failure in Europe, buyers in other markets may be more receptive to such high-quality GM cars. We suspect that GM’s interest in inexpensive cars may stem more for keeping up with the competition than trailblazing its own road.

Opinions?