New Delhi: After losing over $1 billion in its bumpy 20-year ride in India, General Motors Co. (GM) has finally decided to halt sales in the country by the year’s end to focus on exports.
The decision, announced on Thursday, is part of a larger restructuring plan that will see the American carmaker exit South Africa and concentrate on its operations in Brazil and China.
At least 400 direct workers of General Motors India Pvt. Ltd and hundreds of employees at GM dealership risk being left in the lurch. In 2016-17, GM sold 25,823 units in India, down 21% year-on-year.
At 0.84%, GM has a minuscule share of India’s car market after maintaining a presence in the country for two decades. Two years ago, it announced plans to invest $1 billion in India. But that hasn’t materialized. GM first shut its operations in Halol, Gujarat, before deciding to stop sales altogether.
“We explored many options, but determined the increased investment originally planned for India would not deliver the returns of other significant global opportunities,” a company statement quoted Stefan Jacoby, president of GM International, as saying.
“It would also not help us achieve a leadership position or compelling, long-term profitability in the domestic market.”
The company has 5,000 employees in India, including operations at GM Technical Centre in Bengaluru (which will continue to function) and its Talegaon plant in Maharashtra. It has 150 dealerships and 200 service centres. On average, one car distributor employs at least 50 people to sell and service cars.
Existing Chevrolet brand customers will continue to be supported. GM’s India managing director Kaher Kazem said the company will honour commitments to supply spare parts and meet service and warranty obligations on the cars that it has already sold.
One of the early entrants into the Indian market, GM will continue production in the country, largely to take advantage of India’s skilled and inexpensive labour force and lower raw material prices to cater to markets in Mexico and Central and South America.
“In India, our exports have tripled over the past year, and this will remain our focus going forward,” said Jacoby.
One expert said GM’s performance in India, where its stint has been marked by frequent leadership changes, had been hurt by “mismanagement”.
“Sooner or later, it was bound to catch up with them. I think they had a chance to rectify it but they chose to opt otherwise,” said Deepesh Rathore, London-based co-founder of Emerging Markets Automotive Advisors.