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General Motors(GM) Puts a ‘Brake’ to its Sale in India

Automobile lovers may be saddened to know that American carmaker company, General Motors Co. has announced its decision to stop selling Chevrolet cars in India by December this year, after suffering loss worth a billion dollars in two decades of its existence (since 1996) in a  competitive and expansive market like that of India.

The move comes in the wake of GM’s restructuring plans that aim to focus on other foreign markets like those of Brazil, Mexico, US, China, Pakistan, Australia and Southeast Asia.

However, the automaker will continue to go forward with its export operations from India. Their Talegaon plant in Maharashtra will be operational and used as an export centre, although GM does not plan to resume its sale operations or bring in a new brand to India, according to the country head of GM, Kaher Kazem.

“The decision which follows a comprehensive review of future product plans for GM India, is part of a series of actions taken by General Motors to address the performance of its operations worldwide,” a company statement reported.

It is sad that while two years back, CEO of GM, Mary Barra announced their interest in investing a billion dollar in India to manufacture low-cost cars with latest designs under its GEM (Global Emerging Market) programme; the company could not make profits and the domestic sales will now get affected as a result.

With 5000 employees in India, several service centres, Technical Centre in Bengaluru that will stay operational, and people servicing and selling Chevrolet cars, the move to cease sales will come as a major blow to the domestic market and service sector, not to mention the effect on the country’s economy.

About 400 direct workers at GM India will have their jobs taken, even though the car giant shared a small part of the automobile industry in India.

President Stefan Jacoby of GM International maintained that the company looked at several options but the investment that they had planned earlier for India could not materialize since that would thwart their “other significant global opportunities.” As the company president, he also didn’t see any benefit in the long term as the Indian car market did not seem to help them attain leadership, even though the carmaker started its stint in India quite early.

However, going forward, India will essay the role of an exporter for the world’s third largest carmaker as Jacoby believes “India offers benefits as a local cost manufacturing hub with an excellent supplier base which is extremely competitive.”

The service centres would continue to function too for the existing Chevrolet customers who will also get the benefits of spare parts “well beyond their warranty period”, on-road assistance and cars under valid warranty will be considered as well. Kazem further extended support for the employers, suppliers and dealers too, who had been affected by the decision.

The manufacturing plant at Halol, Gujarat was shut down even before the decision came forth and the company plans to sell the plant. This was a major indication of their impending plan to stop domestic sales completely.

2016-17 saw a bad phase for GM’s sales in India when it witnessed a less than 1% market share. On the contrary, “GM India’s export business has tripled over the past year.”

Chevrolet cars manufactured and sold in India are Chevrolet Spark, Beat and SAIL among hatchback variants, Chevrolet Enjoy and Tavera as MUVs (multi-utility vehicles), the Cruze in Sedan variety and the Trailblazer SUV.

But now it’s time for India’s “strong supply base” to be leveraged for exporting Chevrolet Beat to Mexico, Central and South America. This might strengthen India’s export economy and increase its earnings from the trade as the automaker looks to focus on India as a major export hub.

While there are speculations that the main reason behind why GM could not flourish in India was its inability to provide heavy feature-oriented vehicles at a low cost or that maintaining their cars was expensive, it is yet to be ascertained as to who will be at a greater loss here.

 

 

 

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