GM India to cease domestic sales, to focus on exports

Chevrolet Beat car on an assembly line at the General Motors plant in Talegaon

General Motors has announced its latest restructuring plans, revealing an ever-shrinking presence on global markets with plans to remove the Chevrolet brand from the Indian and South African markets. The Detroit-based automobile manufacturer has its largest brand, Chevrolet in India for the past two decades. Also, alongside that, General Motors has seen a rise in the exports from the plants in India and data reveals that the exports tripled in the last one year.

However, struggling to make a turnaround in India, the company put on hold the plan and undertook a full review of its future product portfolio here.

In India, GM said it will transform its plant in Talegaon, in the province of Pune, into an export hub for Mexico and Central and South American markets and will stop selling any vehicles to consumers there. Talegaon production capacity now stands at around 1.3 lakh vehicles a year which can be further expanded to 1.7 lakh units.

GM's exports from India doubled to 70,969 vehicles in the fiscal year 2016-17.

However, much has also been an issue from GM's side - the cars were not getting refreshed on time and lacked a good after sales service in India. The decision by GM comes just when India is expected to become world's third largest auto market within three to four years, as passenger vehicle sales is expected to cross five million units annually as compared to three million plus units now. It will likely need those resources more as a seven-year growth period of USA industry sales comes to an end.

GM plans to continue to work on the $5 billion GEM program, which GM is developing with SAIC Motor.

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The move is part of key restructuring actions in the company's GM International operations to strengthen global business performance. Many of them also blame the high cost of maintaining and servicing Chevy cars for deterring cost-conscious buyers in India.

GM's willingness to back out of hard markets is a radical departure for an automaker that for years has focused on maintaining its position as one of the world's largest automakers. But its market share fell to below 1 percent in the year ended March 31 from 1.17 percent the previous year - even as India's market grew 9 percent to climb above the three million vehicle level. The automaker sold only 29,000 vehicles in India previous year.

GM says that it decided to make these changes after an extensive review of operations in GM International markets.

Azar Jammine, the chief economist at Econometrix, said it appeared GM's decision was a global strategic decision and not linked directly to South Africa's politics and the country's credit ratings downgrade.

GM's announcement comes against the backdrop of predictions that India will become the world's third biggest vehicle market by 2020.

Sources, however, said the decision would affect a minimum of 200 employees.

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