General Motors Co will stop selling cars in India from the end of this year, after battling in one of the world's most competitive markets where it owns less than one per cent share of passenger car sales. The move will mark a significant blow to India's strategy of encouraging domestic manufacturing.
The company said it would no longer market its Chevrolet brand, despite India's promise as a market set to overtake Japan as the world's third largest in the next decade. GM, however, doesn't plan to leave the country entirely. It intends to keep operating its tech centre in Bengaluru and to refocus its India manufacturing operations by making one of its two assembly plants in India - one at Talegaon, into an export-only factory. It plans to sell the Halol plant in Gujarat to Chinese joint venture partner SAIC Motor Corp. Stefan Jacoby, GM's chief of international operations said, “We are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base which is extremely competitive.”
Talegaon plant has a capacity of 130,000 vehicles a year. Jacob said the move to turn it into an export-only plant will not impact GM Korea and its position as an export hub. India will export vehicles mostly to Mexico and South America, among other destinations, while GM Korea will ship Korean-made cars to North America, Southeast Asia, Australia, and Pakistan. Company's global president Dan Ammann said restructuring actions for India cancels “most” of the plan it unveiled in 2015 to invest $1 billion in India to deploy newly-designed vehicle architecture as part of a Global Emerging Market vehicle programme or GEM for short, and build a new line of low-cost vehicles in India.
Ammann said the decisions to significantly scale down GM's operations in India are results of months of analysis over “where we are going to place our bets (globally) as a company.” Despite being an early entrant, GM has struggled to boost its sales and market share in India in part because it has failed to launch low-cost yet feature-rich vehicles that Indian buyers prefer, according to analysts. Many of them also blame the high cost of maintaining and servicing Chevy cars for deterring cost-conscious buyers in India.
GM said in 2015 it aimed to double its India market share to around 3 per cent or more by 2020. But its market share fell to below 1 per cent in the year ended March 31 from 1.17 per cent the previous year - even as India's market grew 9 per cent to climb above the 3 million vehicle level. GM's volume in India fell by a fifth to 25,823 vehicles in the year ended March 31.
