General Motors' plan to invest $5 billion in a family of technology-rich small cars reflects the industry's changing attitudes toward opportunities in emerging markets, where consumers and regulators are increasingly demanding more advanced vehicles.
In the past, Western automakers typically served these markets with low-cost, bare-bones cars, or produced stripped-down versions of vehicles that had reached the end of their product lives in mature markets.
GM President Dan Ammann said the company believes neither approach will work in the future.
"We believe customer requirements are moving very rapidly in these markets," Ammann said. Consumers and regulators "want to have connectivity, good fuel economy, the right levels of safety [technology]. In order to provide the feature and content level, we need to come at this from a different way and from a different level of scale."
The $5 billion project announced last week also represents a deepening of GM's ties to its Chinese joint-venture partner, SAIC Motor Corp., which will co-develop the engines and platform with GM and contribute an unspecified investment. It will be the first time the two companies have developed a platform together.
The resulting vehicles will be sold under the Chevrolet name in China, Brazil, India, Mexico and other emerging markets. GM aims to have the first of the small cars in production by 2019 and expects the program eventually to account for sales of more than two million vehicles a year, Ammann said.
Of the $5 billion in planned investments, GM will devote $1 billion to India, where it hopes to launch 10 new models, double its market share and use an expanded plant to export to other Asian markets.
"GM cannot remain a global leader without making a serious investment towards expanding our presence in growth markets like India," GM CEO Mary Barra said last week at a briefing in New Delhi.
An additional $1.9 billion will be invested in Brazil, GM said.