Emerging market currencies are likely to remain weak for the long term, and that's spurring a strategy shift, General Motors said.
"We believe that this will last for at least for the next 10-15 years," said Stefan Jacoby, president of GM International, which is responsible for markets in Africa, Australia, India, the Middle East, Southeast Asia and South Korea. With the exception of the Middle East, most of those markets currently aren't profitable for GM.
It's an issue that came to the fore in Thailand, a primary manufacturing hub in Southeast Asia, as well as by far the company's largest auto market in the region. The company sold around 56,000 units in Thailand last year, dwarfing the around 15,000 it sold in Indonesia, the second largest Southeast Asian market.
GM took a hit from the Thai baht's devaluation, Jacoby said. From mid-2012 through early May of 2013, the baht shed as much as 10 percent of its value against the U.S. dollar.
"We are less localized [than] our core competitors over there, especially with the passenger cars," he said. "We are more dependent on currency than our core Japanese competitors."
That's prompting a shift in strategy for production, not just in Thailand, but across emerging markets.
"We need to be independent from currency fluctuations, which means we will need to create a deep local content not only on the tier one of the suppliers, but also deeper tier two suppliers," Jacoby said.
It's not enough to just buy components locally, they must be produced locally as well to avoid getting dinged by weaker local currencies, the company noted.
But GM is focused on using existing capacity and it isn't planning on expanding its capacity across Southeast Asia, Jacoby noted.
Similar concerns over the cost of imports were a driver of the decision to exit production in Australia, Jacoby said.
Late last year, GM's Holden unit announced it would pull out of producing vehicles in Australia in 2017, as the industry there was pressured by a strong Australian dollar, which made its exports uncompetitive. The move followed Ford's May 2013 decision to shutter its two Australian plants in 2016. Earlier this year, Toyota also announced its plan to cease production in Australia.
"Our local content had been very low, which made our costs very high, because we had to import with all the logistics behind that," Jacoby said.
"It makes absolutely no sense in a market which is the size of approximately one million vehicles which has approximately 10 percent of these produced locally -- so 100,000 -- to maintain an automotive industry including suppliers in Australia."
So far, the decision to stop production in Australia hasn't impacted GM's sales there, he noted. While the overall auto market there has declined, GM has picked up market share, he said.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1