GM India to cease operations in domestic market, will focus only on exports

GM India has just announced that they will stop local sales of their cars by the end of this year. This comes in after months of speculation wherein news agencies have reported GM spokespersons saying that the company will not be shutting shop here. The sales, service and warranties for all the GM products in India will be honored as per the schedule. Expect to see some healthy discounts on the final lots of cars.

The announcement comes shortly after the company sent out invites for the refreshed Beat launch for later this month. GM India has been present in the country for the last two decades but has had less than a two per cent of the market share. Presently the company sells the Tavera, Cruze, Enjoy, Beat, Sail twins and the Trailblazer SUV in India. Of these, the Tavera and Enjoy are brought primarily by fleet operators while the Cruze and the Beat are the mainstay of the company's private sales. GM India's press note says that General Motors International had reviewed the performance of its Indian arm throughout 2016 and deemed it profitable to carry on solely with its exports rather than concentrate on selling its products here. These exports are said to have tripled in the last few years. GM India exports to Mexico, Central and South America. The vehicles exported currently include the Beat hatchback but will soon also export the Essentia sedan.

A few weeks ago, GM India had announced that it has shut down its Halol plant and will most likely be selling it to its Chinese partner, SAIC. The latter is expected to enter India soon with the MG Rover brand. Exports for GM India will continue through its Talegaon plant located in Pune. Business will continue as usual at its Bengaluru tech-centre as well. However, there will be around 400 layoffs and the company will give its employees a severance package.

In 2014, GM CEO Mary Barra had said that the Indian market has huge potential as far as investments are concerned. At that time, around $1 billion USD was invested into both the Halol and Talegaon plants. There were also talks in 2015 about investing more money for the Global Emerging Vehicle or GEM project. This project will help design, develop and market low-cost cars for the Indian and other relative markets. GM officials said that while the GEM project will continue as usual for other markets, it is but obvious that the Indian market will not be a part of these plans. A few officials in the know-how also said that there were multiple options to survive in the Indian market and this includes either getting products tailor-made for the market here or to stop implementing global standards for the products being made for the local market.

While it is too early to say, if GM were to consider a return to the Indian market, having a fully functioning manufacturing plant and a healthy local component supply chain will definitely help.