Business Other News 20 Jan 2017 General Motors Co re ...

General Motors Co rejigs $1 billion plan to crack Indian market

REUTERS
Published Jan 20, 2017, 1:54 am IST
Updated Jan 20, 2017, 2:02 am IST
GM’s 18-month long review to help firms solve Indian conditions.
After an 18-month review, General Motors Co is nearer to resolving a raft of issues that have hobbled its $1 billion strategy for India.
 After an 18-month review, General Motors Co is nearer to resolving a raft of issues that have hobbled its $1 billion strategy for India.

Detroit: After an 18-month review, General Motors Co is nearer to resolving a raft of issues that have hobbled its $1 billion strategy for India, one of the fastest growing emerging markets for automobiles. The strategy, announced in July 2015, includes selling one of its two Indian assembly plants to a Chinese partner; changing its vehicle platform to provide a product line-up better suited to the local market; and making India an export hub, two Asia-based people with knowledge of the plans told Reuters in Detroit this month. They did not want to be named as the review is ongoing.

GM needs to finalize these moves to turn around its money-losing business in India, where its sales fell by more than a fifth last year to just 28,949 vehicles, taking its market share to below 1 percent. “India is a very tough market. It's growing and has potential for the future. But you need the right recipe,” one of the individuals said. India’s auto market, dominated by Japan’s Suzuki Motor and South Korea’s Hyundai Motor and their local partners, is widely tipped to overtake Japan as the world’s third biggest by around 2020.

 

GM said in mid-2015 it aimed to double its India market share by 2020. But its share fell to 0.93 percent last year from 1.18 percent in 2015 — even as India’s market grew 7 percent to around 3 million vehicles. “Despite being one of the earliest entrants to India ... GM has consistently lost share. One issue is that it misunderstood what value means to Indian consumers. Value doesn’t mean low price, it means having a product that has the right mix of good price and content,” said Puneet Gupta, an analyst at IHS Markit in New Delhi.

 

“That said, GM understands the market’s potential and is positioning itself for a comeback. It has already been fairly successful in exporting small cars by leveraging the frugal engineering skills of India suppliers." The US automaker is close to selling its Halol plant in Gujarat to SAIC Motor, its main Chinese joint-venture partner, the two people said, predicting a deal would be finalised this year.

“We have a defined path: we are aligned with our partner SAIC. They want to take over that plant,” one of them said. SAIC declined to comment. Selling the Halol facility, which has annual capacity for up to 110,000 vehicles, would allow GM to consolidate and modernise its India manufacturing capability at Talegaon, about 100 km southeast of Mumbai, which currently can produce 150,000 vehicles a year. The proposed sale to SAIC has dragged on, the people said, in part because of India’s complex official approval process, which involves multiple stakeholders and regulators.

 

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