The Hindu Business Line : GM assured of smooth India drive with Daewoo

Mumbai, Nov 23 General Motors could be facing the possibility of closure in North America, but is better off in India and the Asia-Pacific region. This is thanks to GM Daewoo Auto & Technology (GMDAT), the engineering entity created after acquiring the Korean carmaker in 2002 and responsible for new car platforms in strategic nations.

Today, GMDAT is the most critical growth driver for GM in India and other parts of Asia, which possibly explains why it is insulated from the crisis in the US and even Europe where Opel’s future is uncertain.

Strategy

In effect, Daewoo which was baled out by GM when it was down and out is the one keeping its present owner alive and kicking.

Daewoo’s India operations were not part of the original takeover plan in 2002 and efforts to acquire the defunct Surajpur plant at a later stage came a cropper.

Despite that setback, Daewoo’s product line-up today is the core of GM’s strategy in its two plants here. GM’s marriage with Daewoo incidentally marked the beginning of Chevrolet and the closure of the Opel chapter. Each of the models that have entered India since have been from the GMDAT (headquartered in Seoul, South Korea) stable and based on a Daewoo platform.

The Optra, for instance, is the Daewoo Nubira, while the Aveo is from the Kalos platform.

The Spark of today is the endearing Matiz. The next car, codenamed M200, is the Chevrolet Beat which suppliers associated with the project refer to as the new Spark.

Impact on funding

The million dollar question, of course, is if GMDAT will be impacted in terms of funding should the parent company face the possibility of being wound up.

Things may actually not be so bad going by similar experiences of top auto component companies Visteon and Delphi, which are shaky in the US but relatively better off in Asia-Pacific.

At the end of the day, the strategy for automobile companies is to carve out independent profit centres across the globe like the Americas, Europe, Asia, Russia and, to an extent, South Africa. The key, therefore, is to generate revenue independently, which is precisely the GM agenda through GMDAT.

The company could still seek support from its other erstwhile allies, Suzuki and Fiat, for powertrain requirements.

Even while GM has made known its intention to set up an exclusive engine facility, it could source diesel engines in the interim from Fiat’s newly commissioned Ranjangaon plant near Pune.

By the end of the day, though, it is imperative for GM to have a healthy balance sheet in India which would mean greater focus on cost control and sourcing components from here to other operations around the world.