Ahmedabad/Mumbai: General Motors Co. (GM) may completely exit India, with the US-based carmaker in advanced talks with Sajjan Jindal’s JSW Energy Ltd to sell its last remaining car plant in the country for about ₹ 3,500 crore, two people with direct knowledge of the matter said. Senior executives of the diversified JSW Group and GM met in the US earlier this month to discuss the plans, said one of the two people on condition of anonymity.
JSW intends to foray into automobile manufacturing by producing an electric car, code-named JSW car, at GM’s Pune car plant and sell it in the price range of ₹ 12-15 lakh, the person added.
GM currently uses the factory at Talegaon in Pune to produce some models of its Beat hatchback solely for exports. The factory is valued anywhere between ₹ 3,000 crore and ₹ 3,500 crore, which includes land cost, an engine assembly line and car assembly line, said the second person cited above.
The facility, which opened in 2008, is spread over 300 acres, including the car plant, with an annual capacity of 130,000 vehicles.
“What I know is that JSW is in talks with GM to buy the plant... there have been discussions. Originally, PSA was also interested but their talks fell through," said the second person.
A spokesperson for JSW said, “We do not comment on speculation."
General Motors also declined to comment.
A potential sale of the decade-old Pune plant would mark the departure of GM from India where it began selling cars in 1996 and subsequently built two factories. In 2015, GM said it would cease production at its factory at Halol in Gujarat to consolidate its business in India—a market that it had then estimated to grow two-and-a-half times to 8 million units a year by 2025—and promised to invest $1 billion more. Instead, GM closed the factory by 2017, amid labour protests and stopped selling its cars in India, forcing nearly 100 dealers to shut shop.
The Gujarat plant was eventually acquired by MG Motor India Ltd, a subsidiary of China’s largest auto maker SAIC Motor Corp. MG Motor plans to sell sport utility vehicles in India from next year.
An entry into automobile manufacturing would be a major diversification for JSW Energy, which mainly produces power from coal, solar and hydro sources. (Read more about JSW electric car plan here and here.)
“If this thing (sale of the Pune plant to JSW Energy) materializes, sooner or later, it is clear indication that GM will wind up its operations for exports also," said Anil Sharma, associate director at MarketsandMarkets, a Pune-based consulting firm. “Globally, GM is on a cost rationalization drive, but I must say that it is an indication of headwinds for other industry players, mostly global (original equipment makers), who have very high cost structure."
In a bid to capitalize on the Indian government’s push for electric vehicles, JSW Energy in August 2017 said that it wanted to venture into electric vehicles, energy storage systems and associated business. It appointed former GM veteran Sergio Luiz Pegoraro Rocha as the chief executive for its car vertical.
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The Indian government has maintained that it wants to promote electric vehicles and had also shown its desire to have an all-electric car fleet by 2030. The move encouraged companies such as Suzuki Motor Corp., which plans to roll out an electric vehicle by 2020 and has tied up with Denso Corp. and Toshiba Corp. to build a lithium-ion battery factory in Gujarat. Home-grown Mahindra and Mahindra Ltd and Tata Motors Ltd also showed aggressive intent in the space when the government came out with a tender for 10,000 electric cars.
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