Companies

Why GM never found the Spark on India Beat

Murali Gopalan Mumbai | Updated on January 11, 2018 Published on May 18, 2017

gm

After a promising start, the US car-maker couldn’t seem to match the aggression of rivals like Hyundai or Toyota

Barely three weeks after shutting down its Gujarat plant, General Motors announced on Thursday that it will stop selling cars in India by the year-end.

The company, however, added that its other facility in Talegaon near Pune will double up as an export hub for South America.

The decision brings the curtain down on a troubled India innings of a little over two decades where GM just could not make any impact in the market.

At last count, it was barely one per cent which pretty much puts in perspective why it decided to slam the brakes on its operations here.

Promising start

GM entered India in 1995 through a joint venture with Hindustan Motors, which hived off its Halol operations in Gujarat as part of the business plan.

It was among the earlier entrants to a rebooted India which had embarked on a reforms programme and opened its gates to multinational carmakers. Things got off to a pretty promising start with the Opel brand which was positioned at the premium end of the market.

This was a different landscape which was used to offerings like the Padmini and Ambassador models though Maruti had emerged as the disruptor with its 800 compact offering.

Opel generated reasonable numbers and there were buyers keen on acquiring this brand.

GM was also riding high globally then, with a strong partner in the form of Suzuki, which was the market leader in India with Maruti.

The two were tipped to team up once the Centre divested its stake in Maruti though all this was still sometime away.

Yet, it was clear that GM was not particularly aggressive with its India intent quite unlike other players like Hyundai, Daewoo and Toyota, which were going the extra mile with market-specific offerings like the Santro, Matiz and Qualis, respectively.

There was also no compelling reason to step on the gas since the American automaker was doing well back home in the then heady days of Detroit.

Daewoo connection

In 2002, GM acquired Daewoo which had gone bankrupt and resulted in the closure of its Indian operations too. This move helped enormously from the viewpoint of effective costing strategies for markets like Europe, but India still remained elusive. GM had also bid adieu to the Opel chapter and ushered in Chevrolet as its new brand to pep things up a bit.

There were also attempts to takeover the Daewoo plant at Surajpur near Delhi but nothing materialised, which prompted the company to set up an all-new facility in Talegaon to rebuild its India innings. Models like the Spark and Beat were perfect fits for this market, but companies like Hyundai and Maruti were way ahead in establishing a strong customer connect. Perhaps, this had to do with a far more aggressive intent coupled with top-class standards of sales and service.

Tough going

GM then had a severe setback when the Lehman crisis crippled the world in 2008 and it was a matter of time before Detroit had its back to the wall. The parent company was in a financial crisis and had to be thrown a lifeline by the US government.

India felt the impact too, and this is when GM’s loyal Chinese ally, SAIC Motor Corp, threw a lifeline in the form of a new 50:50 joint venture.

New models were discussed, which included a foray into light commercial vehicles, and it was widely believed that a new chapter had actually begun for GM. Yet, as in the past, nothing really came out of this as plans were put on hold. SAIC then shelved its product plans with its American ally which had meanwhile increased its stake in the joint venture to 93 per cent.

Tavera recall

In July 2013, GM India recalled 1.14 lakh units of its multi-purpose vehicle Tavera manufactured between 2005 and 2013. A Government-appointed panel found the company guilty of having fudged emissions and specifications data.

It was back to square one for GM and hope came in the form of a hefty $1 billion investment announcement for India when its top management came calling in 2015.

However, this was also put on hold and when the Gujarat plant closure followed, it was amply clear that GM really had no strategy in place for the domestic market. To that extent, the closure was inevitable except that it could well have been avoided had a far more aggressive posture been adopted in the early days.

Published on May 18, 2017
null
This article is closed for comments.
Please Email the Editor