GM losses mount to over ₹1,100 cr in India

K Giriprakash Bengaluru | Updated on January 12, 2018

BL 2-9-2008 MUMBAI: General Motors Corp today inauguration of manufacturing plan at Talegaon in Maharashtra on Tuesday. Pix by SHASHI ASHIWAL

Puts on hold $1 b investment that could delay launch of new models

The Indian operation of General Motors is sinking with losses mounting to over ₹1,100 crore during 2015-16, while revenues have grown around ₹2,500 crore and net worth is ₹249 crore.

General Motors, which commenced operations in India in 1995, is witnessing some of its worst days as it struggles to keep itself afloat among increasing competition from relatively newer players like Renault and legacy car makers such as Maruti Suzuki.

The Detroit-headquartered car maker last year said it is putting on hold its $1 billion investment plan in India which could result in the delay of launching new models. GM had said that it will not bring its global emerging market platform to India because of huge losses incurred by the Indian operations.

A detailed questionnaire sent to General Motors remained unanswered.

Global consultancy firm PwC’s partner and automotive lead, Abdul Majeed told BusinessLine that while it may not be the end of the road for the car maker, it needs to refocus itself on the Indian market and have a solid strategy for the country.

Focus on China

“They still have a chance to get back as India as a market cannot be ignored because this is where the growth has to come from. They have to participate meaningfully in the Indian market,” Majeed said.

Majeed, who works closely with PwC’s US automotive practice, said General Motors’ focus was more on China than on India. He pointed out that the company has not had a big launch for quite some time now and in an industry where the fixed or capital cost is high, it is necessary to have bigger volumes.

“They don’t have a good product in the small car market which constitutes 70 per cent of the market. Nor do they have a good compact SUV model which is the fastest growing category currently.”

Gujarat plant for sale

General Motors last year told the Gujarat government that it is shutting down its Halol plant which has a capacity to produce 1.27 lakh units per year.

The other plant of GM is based out of Talegoan in Maharashtra which can manufacture 1.6 lakh units. It has also put up for sale, the Halol plant from which it expects to get ₹1,500 crore.

According to reports, SAIC Motor Corp, the China-based auto maker is expected to buy the Halol plant to mark its presence in the country.

SAIC also holds less than 10 per cent stake in SAIC-General Motors Investment which runs the operations in India.

The car maker’s largest selling models are multi-utility vehicles Tavera and Enjoy, which constitutes half of its total sales. General Motors sells all its models in India through its brand, Chevrolet.

Its exports for April-November 2016 grew by a whopping 240 per cent to 43,000 units, while domestic sales are down to three digits per month.

The higher export figures show that General Motors is currently more focused on using the local plant as a global manufacturing centre.

Published on January 09, 2017

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