General Motors entered the India market in partnership with SIAC (Shanghai Automotive Industry Corporation) and General Motors India was founded in 1995. However, in May 2017, GM India announced the company’s exit from the India market. We look at the reasons and fallouts:
The Opel (Astra, Corsa and others) and Chevrolet (Tavera, Optra, Aveo, Enjoy, Beat, Spark, Cruze, Captiva etc) models were introduced to the Indian market with varying degrees of success and popularity. The world's fifth largest auto manufacturer was enjoying some overall success in India, one of the world’s fastest growing markets.
As late as April 2017, GM indicated to their (approximately) 150 dealers that the new generation Beat (small car from Chevrolet) would soon be launched. Rumors about a possible pullout of India by GE were denied. However, on 18 May, the company announced that they would be exiting the Indian market. A global restructuring exercise was cited as the reason for the shocking exit.
They were being asked to prepare for a new launch as late as April 2017; however in May a pullout was announced. It is estimated that there are about 18,000 vehicles currently in stock. These are unlikely to find buyers now. The service agreement between the company and dealers will end on 31 December.
People who have purchased GM vehicles are also worried. After sales service and parts replacement will become a big issue for owners; as will the resale value of cars, especially the high end vehicles such as premium sedans.
The company has manufacturing facilities in Talegoan in Maharashtra and Halol in Gujarat as well as headquarters in Gurgaon and a technical centre in Bangalore. People’s jobs at these facilities as well as about 9,500 people employed in showrooms and service centres are now in jeopardy.
According to dealers, they were given false assurances and pullout rumors were denied consistently. Dealers were also offered incentives to keep them with GM though sales were shrinking. The compensation offered to dealers has been described as ‘measly’ and it is likely that a class action suit will be initiated by dealers against the global auto manufacturer in the US.
GM sold fewer than 26,000 vehicles in 2016-17. Its market share in India was less than 1%. Maruti dominance and small car bias in India as well as global issues compounded GM’s problems.
The fact that India is a tricky market means that there could be other exits in the offing. There is some apprehension that Skoda, Ford and Volkswagen could soon follow down this road as well.
Do you have something interesting you would like to share? Write to us at [email protected]
