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| General Motors to expand used car business |
| Jayajit Dash / Kolkata/ Bhubaneswar Feb 25, 2009, 00:29 IST |
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Faced with the prospects of almost flat growth in sales of its passenger cars in India in 2009-10 owing to economic downturn, General Motors (GM) India Limited plans to go for the pan-India launch of its pre-owned vehicles business within three to four months.
GM India is banking on the growing used car market in the country to bring incremental revenues amidst sagging sales of passenger cars in the aftermath of economic recession.
“The details for the pan-India launch of our used car venture are being worked out and the venture is expected to be launched within three to four months. As a part of the countrywide launch of our used car venture, we would roll out 10 outlets for used cars in select cities of the country”, P Balendran, vice-president, GM India told Business Standard.
“India offers a huge market as far as pre-owned cars are concerned as for every model of passenger car sold in the country, two used cars are sold. The used car market in India is still largely unorganised and it needs to be tapped effectively”, he added.
Balendran pointed out that GM India would offer a guarantee of six months on all its used car models and the pre-owned cars would be subjected to a series of inspections at the company’s used car outlets to ensure a fair deal to the consumers.
General Motors clocked a sales volume of 65,702 units in the India market in 2008 as against its targeted sales of 85,000-90,000 units. The auto major had not set any sales target for 2009-10 but expected sales to be flat.
At present, there is only a single outlet of GM India in New Delhi, catering to the company’s pre-owned car business.
The size of the used car market in India is estimated at about 10 lakh units per annum, with the market being largely fragmented and unorganised. The share of the organised market in this segment is only about 10 per cent while unorganised dealers account for another 30 per cent share. The balance 60 per cent of the sales in the used car market is through personal dealings between the buyers and the sellers.
Maruti Suzuki's True Value store is the biggest player in the second hand car market. The other prominent players in the used car segment include Honda Auto Terrace, Mahindra First Choice and Toyota You Trust, the used car ventures of Honda Siel Cars Limited, Mahindra & Mahindra and Toyota Kirloskars' Limited respectively.
Meanwhile, GM India expects its power train facility (engine and transmission plant) in India at its Talegaon (Maharashtra) plant to be operational by the end of 2010. This facility would manufacture both petrol and diesel engines. GM India is investing $200 million on this facility.
“Construction work for our power train facility is in full swing and the plant would be ready for commercial production by the end of 2010. We have plans to make this facility as the sourcing hub for General Motors for engines and transmission equipment”, said Balendran.
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