MercoPress. South Atlantic News Agency

GM Latinamerica one of the most profitable, and with plenty of credit

CEO Ardila is most enthusiastic about the Brazilian auto market.

General Motors operations in Latinamerica, Africa and the Middle East remain as strong as ever in spite GM Corp. filed in the US for bankruptcy protection this week, a top official from the company said.

“There are no plans to sell GM operations in Brazil, or anywhere else in Latin America, Africa and the Middle East,” said Jaime Ardila, General Motors do Brasil Ltda. CEO and CEO for GM Latin America, Africa and Middle East division (GM LAAM).

After months of uncertainty, the Detroit automaker sold a majority stake to the US government in order to keep itself in business. Its LAAM division is one of its most profitable and of which Brazil is the largest subsidiary, saw 2008 sales rise around 3% compared with a 20% decline in GM North American car sales.

“The US government is going to hire a new board of directors and we will all sit down and go from there. What happens from there depends on the new shareholders” said.

Speaking to reporters at GM's offices in Sao Paulo, Ardila said that, with car sales on the upswing in Brazil, the country is one of the most profitable markets for the new GM and the Chevrolet brand.

“We had a great 2008 and will have a lucrative 2009,” Ardila said. “Right now, we are not part of any bankruptcy proceedings. General Motors in Brazil is financially independent,” he said.

“If we need money, we have open credit lines here with local banks that we can tap,” he said, citing banks like Bradesco, Banco Santander, Banco do Brasil and the Brazilian National Development Bank, BNDES. The last time General Motors do Brasil Ltda. tapped headquarters for financing was in 2005.

The company has a planned 2.5 billion US dollars in investments through 2012, with one billion already invested and 500 million in the works. Another 1 billion will come from GM Brazil resources and local banks, although financing hasn't yet been finalized, he said.

For now, GM in Brazil is still part of the new GM and Ardila expects that it will be a key partner in the company going forward.

“GM subsidiaries abroad will remain independent as General Motors in the U.S. turns inward,” Ardila said. “It's not a problem for us in Brazil. We are still in very good shape”.

The company sold around 48,000 vehicles in Brazil in May, up from around 35, 000 in April. Despite a severe economic slowdown in Brazil, car sales have been on par with sales in 2008, which was a record-breaking year. Late in 2008, the Brazilian government gave car makers a temporary break on industrial production taxes, resulting in lower new car prices.