General Motors Co. pulls the plug on its sales operations in India and South Africa, the latest steps in its overarching agenda to maximize returns from fewer, more profitable markets.
The company added that GM Technical Centre-India (GMTC-I) in Bengaluru will not be impacted by this announcement. GM said its will stop selling its Chevrolet brand in both markets by the end of 2017.
But it doesn’t plan to leave India entirely.
GM India ceased production at its Halol facility in Gujarat on 28 April which has a capacity of over 1,30,000 units annually.
“In India, our exports have tripled over the past year, and this will remain our focus going forward”, Stefan Jacoby, GM executive vice-president and head of GM International, said. “We will continue to honour our after-sales service, spares and warranties commitments”, said GM India President and Managing Director Kahen Kazem.
GM will reportedly continue to build vehicles at its Indian plant in Talagaon, which employs about 2,500 workers.
According to analysts, GM’s exit will affect the morale of global manufacturers who are eyeing the Indian market. Now, GM will stop selling Chevys in India entirely by the end of the year. According to Reuters, the Indian auto market will surpass Japan in the next decade to become the third biggest market in the world. India and China had been slated to be the main manufacturing hubs for the new range that was set to begin production in 2018.
The company recalled lakhs of vehicles and followed it up with a poor product strategy by making relatively low-quality cars with Chinese partner SAIC. However, re-sale value of GM’s cars is expected to nosedive and there are fears among customers about availability of spare parts and service centres as many dealers may shut down opeartions now in the absence of sales.
In India, sales of GM were down nearly 21% in the fiscal of 2016-17 to 25,823 units. Customers, on the other hand, are now left with the big question as to what happens to Chevrolet’s service network. “It would not help the company deliver significant returns or achieve leadership position in India”, Kazem said.
GM India started its Indian journey in 1996 and now offers products under the Chevrolet brand in the country.
GM sells Chevrolet brand of vehicles in India.
GM wants to focus more financial resources on regions of the world where it is profitable, especially North America and China, and focus on developing autonomous cars, and will likely need those resources more as a seven year growth period of USA industry sales comes to an end. In fact, the decision was so sudden that Chevrolet dealers in India have still not received any official communication from the company. “We will continue to support all local stakeholders”, he said. It also plans to sell its South African factory to Japan’s Isuzu Motors Ltd, alongside a 30% stake it owns in a joint venture with Isuzu.
Ford Motor Co plans to build a $900 million production plant in India, doubling its investment in the country, as the USA carmaker seeks to.