May 19, 2017 12:50 am JST

GM to drive away from Indian, South African markets

Plant in India to continue as an export base

ROSEMARY MARANDI, Nikkei staff writer

MUMBAI -- General Motors will stop selling cars in India this year, throwing in the towel after a two-decade bumpy ride while keeping a production hub for exports to Latin America.

The decision, following a comprehensive review of future plans for GM India, is part of a series of actions taken to address operational issues worldwide, the company said Thursday. The restructuring moves also include an exit from South Africa, where a plant is being sold to Isuzu Motors.

"Through the review, which began in June 2016, the company determined its greatest opportunity in India to drive shareholder return rests on focusing on exports from India," GM said.

GM, which offers only its Chevrolet brand in the Indian market, has manufacturing bases in Maharashtra's Talegaon and Gujarat's Halol. The Gujarat plant can build 127,000 units a year, while the Maharashtra facility has an annual capacity of 165,000 units for the Spark, the Beat, the Sail and the Sail Hatchback. The Maharashtra plant also operates the Flexi Propulsion Systems Plant with a capacity of 160,000 engines a year.

While the Talegaon plant will be used for export-bound cars only, the company is seeking buyers for its Halol unit, which ended production in April.

Kaher Kazem, GM India president and managing director, said that the company's export business has tripled over the past year and that it will continue to leverage India's strong supply base.

"We recently launched the new Chevrolet Beat hatchback for export to Mexico and Central and South American markets and will launch the Chevrolet Beat sedan later this year for those markets," Kazem said.

GM entered the Indian market in 1996, offering over the years such Chevrolet models as the Spark, the Beat, the Sail, the Sail Hatchback, the Cruze, the Enjoy, the Tavera and the Captiva.

But the cars themselves failed to draw much interest from Indian buyers. IHS Markit reports that GM sold 883 units in April, down 57.2%. Year-to-date sales came in 42.5% lower at 5,818.

IHS Markit principal analyst Anil Sharma reckons that GM did not experiment enough in small vehicles, the segment that works best for the Indian market.

While it is unfortunate that a global automaker like GM has to exit, opportunities certainly exist for global automakers in India, Sharma said.

"Car penetration levels are quite low in India, but with increasing disposable income" the opportunities are many, he said.

IHS sees the country as the world's third-biggest auto market in 2020, trailing only the U.S. and China. Production is seen jumping from the current sixth place to fourth, behind only China, the U.S. and Japan.

Isuzu Motors Ltd.

Japan

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