General Motors joined Ford and Chrysler to ask for a $50-billion bailout from the US government, bringing home strongly the impact of the spreading global crisis on the Indian automobile sector. The domestic industry is already reeling from a 6.16% drop in sales in October, the steepest in the past three years.

While the Indian subsidiary of GM insisted it was business as usual, auto analysts said problems at the parent could affect upper-end models like the Chevrolet Captiva and Optra, which though manufactured in India, have low indigenisation levels. Expansion of the company?s after-sales service and dealer networks could also slow. GM has a sizeable presence in the country with two manufacturing plants at Halol in Gujarat and Talegaon in Maharashtra.

Abdul Majeed, an auto analyst with PricewaterhouseCoopers, however, was confident the Indian subsidiaries of global auto companies would be in a good position to raise future funding if the parent gets a bailout ?as more and more money will go into Indian operations where the demand has still not slowed much considering that penetration levels are still very low?.

But a Mumbai-based analyst feels that the liquidity squeeze at the parent company would eventually impact the image of GM India and could jeopardise its expansion plans at a time when the company is actually improving its bottom line and making profits from its India operations. Sales of GM India went up by 12.16% in April-October at 28,123 units, compared with 25,065 units in the corresponding period last year. October sales, though, witnessed the sharpest dip in three years.

For its part, GM India is optimistic that there would be no impact of global recession on its domestic operations. ?Despite the recession, the company has gone ahead and inaugurated its second plant at Talegaon, invested $210 million at its upcoming engine plant and maintains its target of gaining a 10% marketshare by 2010 as GM India is a debt-free company and all expansion plans are being met through internal accruals,? P Balendran, vice-president, GM India, told FE.

For US parent GM, on the other hand, a lot rides on a federal bailout as it may run out of operating cash as early as year?s end. GM had $16.2 billion on hand as of September 30, down from $21 billion at the end of June, and needs $11 billion to pay its monthly bills.

?A (strategic) bankruptcy wouldn?t address our immediate liquidity concerns,? said Renee Rashid-Merem, a spokeswoman for Detroit-based GM. ?It?s not an option for GM, because it creates more problems than it solves.?

GM?s US sales, which fell 21% last quarter and 45% in October, ?would be devastated? by a bankruptcy filing, CEO Rick Wagoner said. The ?unimaginable consequence? of a forced bankruptcy ?motivates us to really come up with cash in every way possible,? he said. Wagoner said the US automaker would need state help before Barack Obama takes over the White House in January. ?This is an issue that needs to be addressed urgently,? he said.