General Motors (GM) has already announced a United States (US) court filing under Chapter 11 of the US bankruptcy code. Chapter 11 is different from Chapter 7, which relates to liquidation. The moment common people hear the word ?bankruptcy? they think that the concerned company will go out of business, which is not the case under Chapter 11. GM has taken this step to restructure its operations and create a highly competitive and renewed company to compete in the global automotive industry, which is facing many issues such as excess capacity, legacy cost, environmental concerns, fuel efficiency etc.

GM is expected to relaunch in about 60-90 days as a renewed company, which is different from the current GM and has clear advantages such as lower debt burden, competitive operating cost structure and the best brands. This is an effective step to turn around GM while maintaining the interests of all stakeholders.

The key for GM will be a quick transition to the new company, which will be stronger, leaner and cost competitive and will also have a clear plan of winning in all markets, including emerging markets such as India.

There is no doubt that the Indian automotive industry will grow significantly in the long run. Any original equipment manufacturer planning to increase volumes should have a clear growth plan for emerging markets, including India. The Indian passenger car market will continue to be dominated by small cars in coming years, taking it into account the low penetration in the passenger vehicles segment. Therefore, having the right product mix within the growing segments, especially small and medium, is going to be the key for success. There will be new segments within the small car with the launch of the Tata Nano and other similar products hitting the market in the next couple of years. GM has had a presence in the country for over a decade and has also clarified that Indian operations are not included in the US filing for Chapter 11.

The company is focusing aggressively on all developing markets including India, and has over a period of time brought many products that are suitable to the Indian market, including small cars. The company has brands such as Chevrolet, Spark, Aveo etc to cater to the Indian market, and has also made quite a bit of investment both to participate in the domestic auto market and also support global sourcing in the long run. India is a key market for GM and is also a destination, which will play a bigger role in shaping the new GM in the years to come.

The company should continue to create the best and world-class products taking into account factors such as fuel efficiency, safety, comfort and designs that suit the Indian market and are very competitive products in the growing segment.

In addition to these aspects, pricing plays an important role in the Indian market and therefore pricing the product rightly will help the company compete more aggressively in the highly-competitive domestic market. In these difficult times, the key is to communicate; communicate the company?s commitment and good intentions to the Indian market and all other stakeholders including dealers and customers. The company should also ensure that dealers and customers continue to receive excellent services including aftermarket services such as spare parts, warranty coverage etc.

The parent is in the process of implementing these initiatives and hopefully GM India will contribute significantly to shape the new GM.

The author is auto analyst with PricewaterhouseCoopers