Ahmedabad: Production at General Motors India’s Halol car plant in Gujarat will come to an end on 28 April, as the automaker consolidates manufacturing at Talegaon in Maharashtra.
The company, which rolled out its first Opel car in the country from this factory in 1996, failed to crack the Indian market, and currently has less than 1% market share. Its sales fell by more than a fifth last year to just 28,949 vehicles.
“We will support our employees at the Halol plant throughout this transition,” GM India president and managing director Kaher Kazem said in a press statement. GM was the first automaker to set up a factory in Gujarat.
The company had said in July 2015 that it wanted to shut the factory; however, in June 2016, the company decided to extend production until March 2017.
SAIC HK Ltd, a unit of China’s SAIC Motor Corp. Ltd, has been in talks to buy the Halol factory. The Competition Commission of India (CCI) has also approved the acquisition of certain assets of GM’s Halol plant by SAIC Motor HK.
When contacted, an SAIC executive said the company will buy the Halol factory only if it is free of encumbrances, with no-objection certificates from state authorities. He did not wish to be named.
As many as 650 workers at Halol have declined a voluntary separation scheme offered in December.
When contacted, a worker said the company has again offered them a package which includes 100 days of wages and that they were looking into it.
“We have in place the options of a significantly enhanced separation package or continuity of employment at our Talegaon plant,” Kazem further said in his statement.
Transition support for employees will include financial counselling and tax advice, as well as information and transition support for employees transferring to the Talegaon manufacturing facility, the company said in its media statement.
GM India is working with government authorities and labour unions as well as affected employees and suppliers for an orderly transition, it said.
Kazem added that GM India continues to work towards the asset-only sale of the Halol site.
GM has invested close to Rs1,200 crore in its Halol plant, which opened in 1996. It makes the Tavera and Enjoy multi-utility vehicles and the Cruze sedan under the Chevrolet brand. The factory at Halol, 50km from Vadodara, is one of two GM facilities in India, and has a capacity to manufacture 127,000 cars a year. The other factory—at Talegaon in Maharashtra—can manufacture 160,000 units annually.
Between the two factories, GM India manufacturers the Beat, Sail, Cruze, Enjoy and Tavera. Its Captiva and Trailblazer are imported as fully-built units.
A government official dealing with the issue, who termed the GM decision a business move, said the government has permitted GM India to close Halol operations on the condition that it would resolve all workers and labour related issues. He did not wish to named.
As part of the earlier plan, GM was to introduce models from its Global Emerging Market (GEM) platform 2019 onwards. The GEM platform, jointly developed with SAIC was for countries like India, Brazil and Mexico and for this, the company had in July 2015 announced an investment of $1 billion in Talegaon. These included a sedan, a hatchback and an SUV. Last year, GM said it has shelved plans for Spin, a multi-purpose vehicle. The company decided to hold back the $1 billion investment and its product plans citing a change in customer preferences to SUVs and regulatory uncertainty.
The announcement comes at a time when the state has emerged as the next auto hub of the country after the Sriperumbudur-Oragadam belt in Tamil Nadu, which accounts a major portion of the country’s automobile production. It all began when under the leadership of the then chief minister Narendra Modi, Tata Motors decided to shift its Nano factory from Singur to Sanand in 2008 after it faced local opposition in West Bengal over land acquisition.