GM to stop making cars for Indian market

19 May, 2017, 10:54 | Author: Oscar Goodwin
  • Chevrolet Beat car on an assembly line at the General Motors plant in Talegaon

GM has been manufacturing vehicles in the country since 1926 but chose to cease operations as part of the company's plans of restructuring its global operations to improve overall financial performance.

GM's manufacturing facility at Talegaon in India will continue as an export hub for Mexico and Central as well as South American markets.

"In India, our exports have tripled over the past year, and this will remain our focus going forward", GM International president Stefan Jacoby said in a statement.

In a separate move, GM plans to stop building Chevrolet vehicles in South Africa and sell its South African factory to Japan's Isuzu Motors Ltd, along with the 30 percent stake the US automaker owns in a truck venture with Isuzu Motors.

The company informed employees of General Motors India about the decision.

GM sold its cars in India under the Chevrolet brand.

However, declining performance has forced GM to focus its India efforts primarily on manufacturing and exporting.

Despite being an early entrant, GM has struggled to boost its sales and market share in India in part because it has failed to launch low-priced yet feature-rich vehicles that Indian buyers prefer, according to analysts.

A similar conclusion was reached in South Africa. GM also said it is in discussions with PSA Groupe, which has agreed to purchase Opel in Europe, to purchase or acquire the Opel brand in South Africa.

"After a thorough assessment of our South African operations, we believe it is best for Isuzu to integrate our light commercial vehicle manufacturing operations into its African business", said Jacoby. "We will continue to optimize our operations market by market to further improve our competitiveness and cost base".

Chief Executive Mary Barra traveled to New Delhi in 2015 to announce a plan to invest $1 billion there to build a new line of Chevrolet models developed as part of a Global Emerging Market vehicle program - GEM for short.

The Japanese company will also purchase GM's vehicle conversion and distribution centre along with its parts distribution centre. It will be withdrawing from East Africa, also by the end of this year, and will sell its 57.7% stake in GM East Africa to Isuzu.

As a result of these actions, GM expects to realize annual savings of approximately $100 million and plans to take a charge of approximately $500 million in the second quarter of 2017. About $200 million of the special charge will be cash expenses.

Volvo's decision to start assembly in India and market its vehicles as "Made in India" follows an initiative by the national government, which seeks to highlight and promote the country's manufacturing expertise.

A term sheet was signed a few months back to evaluate a possible deal but the Chinese firm stated that a final takeover would be subject to government approvals, settlement of labour and all other pending issues by the American auto major.

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