General Motors India has announced that it will stop selling cars in India and will now focus entirely on its export operations. The sale of GM products will be stopped in India by the end of this year. The decision comes as a part of the actions taken by General Motors, following a comprehensive review of of future plans for GM India. The review began in June last year when the company determined that its greatest opportunity in India to drive shareholder return rests on focusing on exports.
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.”
The move is in line with GM’s global allocation of capital and investment in its business around the world in order to generate stronger returns and drive shareholder value. “Our decision in India is an important milestone in strengthening the performance of our GM International operations and establishing GM as a more focused and disciplined company,” said Jacoby.
While GM decided to consolidate Indian manufacturing at its Talegaon Assembly Plant, the manufacturing unit at Halol was shut on 28th April this year. Kaher Kazem, GM India president and managing director, said the focus for the GM India manufacturing base at Talegaon will be export markets, upcoming export vehicle launches and exploring longer-term strategic options.
GM India informed its employees of the decision today. The company plans to work closely with affected customers and dealers. The customer support centre will remain open and all warranties and service agreements, as well as ongoing service and parts requirements for all vehicles, will continue to be honored. Customers can call 1-800-3000-8080, email them at email@example.com or visit chevrolet.co.in.
GM India had been struggling with consistent losses in the country with a rather weak three percent market share. Considerable losses every year by the Indian division, the parent company was forced into reviewing its investment and future plans in the country. Net loss fo rthe company had been Rs 1,003.39 crore in 2014-15 and Rs 3,812 crore in 2015-16.
If the brand does plan to comeback, the strategy should perhaps differ from SAIC models. SAIC-sourced models haven't done well in India due to various reasons. One of them includes dated designs. SAIC cars in India have historically been short on features and technology too. Indian customers are now better educated and are aware of their requirements from a car. The Indian market now needs better-looking and well-equipped vehicles, rather than just a car with a small price tag.