American automobile giant General Motors will stop selling its Chevrolet cars in India by the end of this year.
The decision comes after battling unsuccessfully for two decades in the world’s most fiercely competitive car market.
But the world’s third largest carmaker will continue to manufacture and export cars from the country. The decision was announced as part of a series of restructuring from the Detroit automaker on Thursday, dealing a significant blow to India’s strategy of encouraging domestic manufacturing.
“General Motors India will focus on its growing vehicle export manufacturing operations and cease sales in the domestic market by the end of 2017,” the company said in a statement.
Added Stefan Jacoby, GM’s executive vice-president and president, GM International: “We explored many options, but determined that the increased investment originally planned for India would not deliver the returns of other significant global opportunities. It would also not help us achieve a leadership position or compelling, long-term profitability in the domestic market.”
This decision is consistent with GM’s global disciplined allocation of capital and investment in its business around the world designed to generate stronger returns and drive shareholder value.
“Our decision in India is an important milestone in strengthening the performance of our GM International operations and establishing GM as a more focused and disciplined company,” Jacoby said.
Kaher Kazem, GM India president and managing director, said the focus for the company’s manufacturing base at Talegaon would be export markets, upcoming export vehicle launches and to explore longer-term strategic options.
“GM India’s export business has tripled over the past year,” Kazem said, adding,” Exports will remain our focus going forward, as we continue to leverage India’s strong supply base. We recently launched the new Chevrolet Beat hatchback for export to Mexico and Central and South American markets and will launch the Chevrolet Beat sedan later this year for those markets.”
He also promised to support all affected customers, employees, dealers and suppliers. “Chevrolet owners can be assured that we will continue to honour all warranties and provide comprehensive after sales support,” he said. The decision to exit India has also impacted the company’s plans for the country, the fastest growing passenger car market, where Chevrolet car sales were plummeting, showing no signs of pick up in financial year 2016-17.
The company sold just 25,823 cars in the last fiscal year and its market share has dropped below 1 per cent in the country. General Motors sells more cars in the US in less than half a typical workweek. However, the good news for GM India was that its exports saw a sharp climb from 37,052 units in 2015-16 to a whopping 70,969 units in FY 16-17.
"We are not giving up the benefits India offers as a local cost manufacturing hub with an excellent supplier base, which is extremely competitive," Jacoby pointed out. This is one reason why the company will be using India as an export hub and ship Made in India cars to Mexico and Central and South American markets.
The Talegaon plant has a capacity to produce 130,000 vehicles annually. The company also said it would keep operating its tech centre in Bengaluru.
The company plans to sell its Halol plant in Gujarat to Chinese joint venture partner SAIC Motor Corp. It said the existing Chevrolet customers in the country would continue to be supported in the market. Across affected markets, GM is working with employees, their union representatives and local authorities to provide transition support. The move is aimed at driving stronger financial performance and focuses its capital and resources on business opportunities expected to deliver higher returns.
General Motors will also offload its South Africa manufacturing unit to Isuzu Motors. The company said its Chevrolet brand would be phased out of both markets by the end of 2017. “As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” Mary Barra, chairman and chief executive at GM, said in a statement.
“Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalise on growth opportunities for the long term. We will continue to optimise our operations market to further improve our competitiveness and cost base,” she said. Chevrolet customers in India can rest assured that the customer support centre will remain open and all warranties and service agreements as well as ongoing service and parts requirements for all vehicles will continue to be honoured, the company said.
It also said the company is committed to maintain a service network across key locations with staff trained to take care of all the needs for repair and maintenance. It will also continue supporting its customers with service and spare parts, as well as by honouring warranties. Vehicle warranties and service commitments made to customers will also be honoured and Chevrolet will continue to provide service centre support along with 24/7 contact centres and roadside assistance support.
michaelgonsalves@mydigitalfc.com
