Putting up A Brave Front

Written by Alokananda Chakraborty | Malabika Sarkar | Malabika Sarkar | Updated: Jun 17 2009, 04:34am hrs
Gm sale chart
There for you. There for India. Thats theme of the General Motors India (GMI) campaign currently running across major websites, including Yahoo.co.in, Rediff.com, Moneycontrol.com and expressindia.com. The campaign is endorsed by the man whose job you certainly dont want at the moment: Karl Slym, president and managing director, GMI.

Indeed, the Indian unit of General Motors Corp is putting up a brave front as its parent, the 100-year-old US auto behemoth, struggling under a $37-billion in debt, filed for Chapter 11 bankruptcy just weeks ago. Click on the banner ad, and you will be directed to a microsite. The ad lists GMIs milestones: the company has already invested over $1 billion in India; it will launch its Cruze brand and a mini-car on schedule; the automobile company plans to have 250 sales and service outlets in India by the end of 2009 and so on.

Theres also a special FAQs section to answer queries related to the impact of the bankruptcy filing by the parent company on India. There are questions such as: Will the US bankruptcy filing in any way impact the Indian operations How about spare parts and service How does Chapter 11 impact customers in India And the answers are straight. No beating around the bush. No spin.

By now, we agree that good news travels fast online and bad news faster. With social networks, blogs and microblogs, the speed with which bad news can travel on the world wide web is staggering, and GMI knows it. If Johnson & Johnsons handling of the Tylenol crisis in the 1980s is considered the gold standard for crisis communication, GMI reaction is well-timed and appropriate.

We are committed to being a company that you can depend on, the ad assures. The company will not say how much it plans to spend on this tactical campaignthat will run in a two-month burst and cover digital, print, television and on ground activitiesbut the objective is simple. It will lead to improved customer confidence and awareness of Chevrolets commitment to India, says Slym.

India matters to General Motors. GM India plays a significant role in the growth trajectory of the company, P Balendran, vice-president, GMI, told FE in a recent interview. One cannot be a global leader without having a significant presence in an emerging market like India, which is also the second fastest growing market in the Asia Pacific region. The company began doing business in India in 1928, assembling Chevrolet cars, trucks and buses. It had to stop its assembly operations in 1954; in 1994 General Motors re-entered the market in a 50:50 JV with Hindustan Motors. And in 1999, GM bought out the HM interest.

In the US, bankruptcy or Chapter 11 is used to make a brand stronger to suit the changing business environment, Balendran is quick to point out. It will only make GM stronger, leaner and more customer-focused than ever before. He adds that all of GMIs programmes are self-funded. In other words, its business as usual.

While the company has been quick to use its decisive leadership to calm widespread fears for the future, concerns remain. For starters, analysts say, the company will find it difficult raising funds for its ambitious expansion plan. The auto maker needs somewhere around $200 million for its engine making plant in Maharashtra. Part of the funds is expected from internal accruals, while the rest has to be raised from financial institutions. And lenders arent exactly falling over each other to bankroll its expansion plans, says an executive who has worked closely on developing the brands early communication strategy in India.

India vendors will be hit as the company goes through the drill of cutting production, models and brands. So will be IT firms such as Wipro and Tata Consultancy Services that service the company. Communication, it seems, is the chosen tool for the GMI brass to address the concerns. At press conferences, though prepared statements to the media, it has reiterated that its commitment to India and the customers here remain strong. And that in about 60 days, when the bankruptcy proceedings are over, it will emerge stronger.

GM India is just one step from becoming a truly local manufacturer with the to-be-launched Chevrolet Cruise being built in India as opposed to the CKD (completely knocked down) units being assembled now, Slym told reporters on the sidelines of the launch of the LPG-powered variant of the companys compact offering Spark recently.

The good news is GMI has been able to hold on to its sales numbers (see graph). The minor blips, the company insists, are just a reflection of the overall slowdown in the sector. The sales of Spark have increased 25% per year to date, says Slym. The drop in the sales of our commercial vehicle Tavera is in line with the overall decline in the auto industry and specifically, in commercial vehicles.

Yes, it a protracted battle ahead for General Motors in India. And a lot depends on how the reorganisation is hammered out by the parent company. In the section below we have three industry experts laying down the key concerns for GMI at the moment and the road ahead for the brand in India.