Today, US-based auto major General Motors said that it will focus on its growing operations of vehicle export manufacturing and cease sales in the domestic market by the end of this year. The company will stop selling cars in India from the end of 2017, drawing a line under 20 years of battling in one of the world’s most critical competitive markets where it has less than 1 % share of passenger car sales. The decision was a part of a series of restructuring actions from the Detroit automaker, which marks a significant blow to India’s strategy of encouraging domestic manufacturing.
This has affected its plans for India too and hence there will be no new cars coming. There will be no Beat which will be making its way to India. However, the General Motors (GM) will still be using India as an export hub. And cars will be made in India and will be shipped out to Mexico and Central and South American markets. Talegaon plant and the Halol plant in Gujarat will be used for this purpose, and Halol plant will be sold to its Chinese joint venture partner SAIC Motor Corp. GM is planning to keep the operation of the tech center in Bangalore and to refocus its India manufacturing operations by making one of its 2 assembly plants in India – the one at Talegaon, about 100 km southeast of central Mumbai.
The Chief of General Motors, Stefan Jacoby said that they are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base and which is extremely competitive. The exports of General Motors (GM) from India to Mexico and Latin America nearly doubled to 71 thousand vehicles in the fiscal year that ended on 31st March. The Talegaon plant has a capacity of 1.3 lakhs vehicles a year. Mr. Stefany also added that the decision of GM to turn the Talegaon project into an export-only plant will not impact any operation in Korean assembly and its position as an export hub.
According to him, “Many options have been explored, but we have determined the increased investment originally planned for India will not deliver the returns of other significant global opportunities. And it will also not help us to achieve a global leadership position and long-term profitability in the domestic market. Now we need to deliver appropriate returns to our shareholders. It was very difficult to reach this decision, but it is the right outcome to support our global strategy”. He also added, “GM’s decision in India is an important milestone to strengthen the performance of our International operations and establishing General Motors (GM) as a more focused and disciplined company”.
This big announcement of GM is very much consistent with its global disciplined allocation of capital investment in its long-term business around the world to generate stronger returns and shareholder value. It will work closely with all the affected customers and dealers on this transition plan.
