Buzz around General Motors' exit from India gets loud

Dealers mull legal action if compensation is denied

Talks are gradually gaining ground that the US based car major General Motors (GM) is mulling a complete exit from India, more so as the company's market share in the domestic market now is an abysmal 0.94 per cent. The dealerships are in an exit mode with the carmaker not giving any clear indication on future product launches.

Sources indicate that GM might sell its Talegaon asset to a global player who might continue to contract manufacture cars for GM.

A curious case is of the dealerships; from 223 sales outlets in November 2015 to 168 outlets at present. Sample this: Renault India, a late entrant to the Indian market, plans to take its dealership count to 320 by the year end from a current 270 outlets.

For GM, however, having sold just about 24,505 cars during the April 2016 to February 2017 period, it roughly works out to be 13 cars sold per outlet per month. Dealer sources say that below 50 cars per month no dealership is viable even in the smallest of towns in India.

Industry sources indicated that GM India had held a dealer council meeting in March. Around 15 dealers are part of the council, however, around 45 anxious dealers had turned up for the meeting. "No clear game plan was shared with the dealers about future car launches etc," said the source.

A leading dealer who operates a network of Chevrolet brand sales outlets across a northern state indicated that he has been selling around 10-15 cars per month. "I am still one of the best performing dealers that GM has in India. However, it is now clear that the company is not at all serious about their Indian operations. They have not initiated any talks for a shutdown yet as they have to pay a compensation to the dealers in that case," he said.

The dealers indeed are bleeding, however, now they say that they are up for putting up a legal fight against the company if need be. "If the company is trying to burn us out so that we resign on our own, we are also ready to take the matter to the judiciary," said a dealer.

On its part, the national automobile dealership body Federation of Automobile Dealers Association (FADA) has communicated to its dealer members that in case they wish the association to take up their cause, they are willing to do so. As such around Rs 10 crore of investment is stuck per dealer, taking the cumulative investment at stake to Rs 1600-1700 crore.

GM India has practically turned its Talegaon plant near Pune to an export hub, the plant is churning out the left-hand-drive hatchback Beat for the Mexico market. Meanwhile, its Halol plant in Gujarat is inching towards a shut down amidst labour protests.

Sources claim that the company is in talks with global automajors including European carmajor PSA Group. "Both the companies are believed to have had discussions on the Talegaon asset as the French carmaker bought the loss making Opel division from GM recently. From what it seems, GM is looking at a deal where the new acquirer continues to contract manufacture cars (for export markets) for GM in Talegaon," said a source close to the developments.

A GM India spokesperson said over e-mail, "As we have said many times, GM continues to believe in the growth potential of the Indian market. We will continue to closely monitor the market and evolve our product strategy accordingly. We do not respond to speculation. GM India continues to focus on consolidating its manufacturing at our Talegaon plant. Our launches for 2017 are progressing to plan. These commenced with the production of the Chevrolet Beat for the Mexico market in March."

A mail sent to PSA Group did not elicit any response.

However, after two decades of its operations in India, it seems that the Detroit-based car maker is in an exit mode from the Indian geography.