General Motors to officially exit Indian market

General Motors

The US based auto giant General Motors has announced that it will take exit from the Indian market by the end of this year. The GM Motors says it would now concentrate on expanding its vehicle export manufacturing operations and no longer market Chevrolet brand in India. However, this new comes as a shock for many but it isn’t really surprising considering GM’s dipping sales numbers in the country in last five years.

The auto major entered India in 1995 but it isn’t able to find a firm foothold here with less than 1 percent market share. Its exit is a significant blow to India’s make in India campaign and strategy for encouraging domestic manufacturing. Its dream of seeing India as World’s third largest market overtaking Japan has been shattered.

The GM doesn’t plan to leave India entirely as it looks to keep operating its two assembly plants in India- Talegaon which about 100 km Southeast of Mumbai. It plans to sell the Halol Plant in Gujarat to Chinese Joint Venture partner SAIC Motor Corp. General Motors’ Chevrolet currently sells Beat hatchback, Spark, Tavera, Enjoy, Cruze, Trailblazer, Sail and Sail sedan in India.

Stefan on the decision to stop local sales in India, “We determined that the increased investment required for an extensive and flexible product portfolio would not deliver a leadership position or long-term profitability in the domestic market.”

GM’s India plants exports mainly to Latin America and Mexico which has doubled to 70,689 units in this fiscal year. On the contrary, the domestic sales declined to merely 25,000 units from 32,000 a year ago. The Talegaon plant has a capacity of 130,000 vehicles a year. Besides, last year Ford Motor has announced its plans to produce a new compact car for the emerging markets.

Mr Stefan Jacoby, GM executive vice-president and president of GM International said, “We explored many options, but determined 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. Difficult as it has been to reach this decision, it is the right outcome to support our global strategy and deliver appropriate returns for our shareholders.”

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