GM upbeat on India but will have its work cut out

For a company that has been around in India for nearly two decades, it is astonishing how General Motors has just not been able to create an impact. With sales of barely 60,000 units annually, the company is hardly on any rival’s radar

In this backdrop, Stefan Jacoby’s interview to Reuters was significant given the ambitious goals GM has set for itself in the coming years. The Chief of International Operations said he was looking at producing 400,000 cars in India over the next decade which marks a staggering eight-fold jump in numbers. Of these over 150,000 cars would be exported as part of a plan where the country’s potential as a manufacturing hub would be optimised.

GM has been slamming the brakes on operations in Indonesia and Thailand while Korea, which has been its lifeline for years, now grapples with high costs.

This is perhaps where India would need to play a more proactive role though it is not too clear how the company is going to begin firing on all cylinders after decades of inertia.

GM is a dominant player in China, with sales of over three million units annually, while the US and Brazil are its other important markets. There was a time when it was tipped to partner Suzuki in the privatisation of Maruti but all this was before the Daewoo acquisition in 2002.

At that point in time, GM had a 20 per cent stake in Suzuki and it was widely believed that this partnership would leverage opportunities in India and the Asia-Pacific region.

The Daewoo buyout did help the American automaker in growing its presence in other markets. However, there was little progress made in India even while the Chevrolet brand was positioned as part of the comeback strategy. During the 2008-09 global slowdown, GM had its back to the wall and needed support in the form of equity from China’s SAIC Motor Corp to put its India house back in order.

Jacoby clearly wants to change all this except that the going will be tough. He is absolutely right about not ignoring India’s potential as the world’s third largest automobile market by 2020.

However, will this delayed reaction help get back customers who have a host of other brands to choose from? GM will need to do something really special to create that special connect in the market which will translate into big numbers.

GM’s acknowledgement of India’s potential may have just come a little too late in the day.

It will be interesting to see how it can pull it off.

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