General Motors (GM) – which has been struggling to make a turnaround in India despite being an early entrant in the country's car market – has now indefinitely put on hold its investments on new models for the country.
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Amid a review of how to revive its fortunes in India, GM in 2015 announced plans to invest $1 billion and produce half-a-dozen locally manufactured models. The US automaker is also set to sell its Halol plant in Gujarat to SAIC Motor HK, part of China's SAIC Motor Corp, which has been planning to enter the Indian market. The Competition Commission of India on Friday said that it approved SAIC Motor HK's acquisition of certain assets of GM India.
Selling the Halol facility will leave GM with only the Talegaon plant, with annual capacity to produce about 150,000 vehicles, to consolidate its India operations.
"...Given the shift in customer preferences in India, we are conducting a full review of our future product portfolio and have put on hold future investment in our all-new vehicle family for the market until we firm up our product portfolio plan," a GM official spokesperson told PTI.
India's auto market is perceived as a tough market by many and is primarily dominated by Maruti Suzuki, in which Japan's Suzuki Motor has a stake, and South Korea's Hyundai Motor. The country is expected to overtake Japan as the world's third-largest car market by around 2020.
Even though GM said it hopes to double its India market share by 2020, it has consistently lost to its rivals and now has less than 1 percent of India's market. However, it managed to cut net loss to Rs 1,003 crore in 2014-15 from Rs 3,812 crore in 2013-14. GM says it will now focus on "sustainable profitability" in the country.
"If GM is going to make significant investments, we need to be certain that they will generate significant shareholder value," the spokesperson said. "We are consolidating our manufacturing operations in Talegaon for both domestic market and exports. Exports continue to be an important aspect of our operations in India indeed," the spokesperson added.
GM India's current portfolio in the country includes hatchback Beat, sedan Cruze and multi-purpose vehicle Enjoy, among others. In October 2016, the carmaker also unveiled its SUV Trailblazer in the Indian market.
