Buzz around GM's India exit gets loud as it loses market share at fast pace

During April-February 2016-17, it roughly sold 13 cars per outlet per month

Speculation is gaining ground that US-based car major General Motors (GM) is contemplating exiting India in the context of the company’s fast-reducing market share, which is now 0.94 per cent in the country.

Its dealers are in an exit mode, with the carmaker not giving any indication on its product launches. Sources said GM could sell its Talegaon assets to a global player, which might contract-manufacture cars for it. A curious case is of dealerships: From 223 sales outlets in November 2015 to 168 outlets at present. Sample this: Renault India, a late entrant to the Indian market, is planning to take the number of its dealers to 320 by the end of the year from 270 now.

For GM, which has sold about 24,505 cars during April-February 2016-17, it works out to roughly 13 cars sold per outlet per month. Dealer sources say that no dealership is viable if an outlet cannot sell at least 50 cars a month even in the smallest of towns in India. Industry sources said that GM India had held a dealer council meeting in March. Though around 15 dealers are part of the council, around 45 anxious dealers had turned up for the meeting. "No clear game plan was shared with the dealers about car launches, etc," said a source. 

A leading dealer who operates a network of outlets selling Chevrolet in a northern state said that he had been selling 10-15 cars per month. 

“I am one of the best-performing dealers of GM in India. However, it is clear that the company is not serious about its Indian operations. It has not initiated talks on a shutdown because it has pay compensations to the dealers in that case,” he said. 

Another dealer said: “If the company is trying to burn us out so that we resign on our own, we are ready to take the matter to the judiciary.” 

On its part, the Federation of Automobile Dealers Association (FADA), the national automobile dealership body, has communicated to its members that the body could take up their case. As such, investment of around Rs 10 crore per dealer is stuck. That takes the total to Rs 1,600-1,700 crore. 

GM India has converted its Talegaon plant near Pune into 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 shutdown amid labour protests. Sources said the company was in talks with global auto majors including Europe’s 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 by which the acquirer continues to contract manufacture cars (for export markets) for GM in Talegaon,” said a source close to the development. 

A GM India spokesperson said on 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…”

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

End of the line?

• 1928: GM begins business in India, assembling Chevrolet cars, trucks and buses
• 1954: It ceases its assembly operations; GM continues its tie-ups with Hindustan Motors to build Bedford trucks, Vauxhall cars, Allison Transmissions and off-road equipment
• 1994: GMIPL formed as a joint venture.Hindustan Motors owns 50 per cent while General Motors own the rest; to produce and sell Opel-branded vehicles
• 1999: GM buys out Hindustan Motors’ stake
• 2000: GMIPL moves its headquarters to Gurgaon
• Until 2003: GMIPL continues to produce Opel cars at the Halol facility 
• 2003: GM starts production of Chevrolet vehicles at Halol
• 2003: GM opens its technical centre operations in Bengaluru
• 2006: The centre operations are expanded to include purchasing and financial support services for GM operations located outside of India 
• 2006: GMIPL begins construction of a second vehicle assembly plant in Talegaon
• 2008: Talegaon begins production of Chevrolet vehicles in September
• Late 2009: GM announces that it would put its India operation into a 50-50 venture with Shanghai Automotive Industry Corporation of China (SAIC), which is the partner of GM’s main venture in China
• Oct 2012: General Motors-Chevrolet announces that it has increased stake in its Indian subsidiary to 93% by buying 43% from its Chinese partner SAIC for an undisclosed sum
• 2015: GM says it would  shut the Halol factory and spend $1 billion in expanding its Talegaon factory in Maharashtra

Halol factory to shut down on April 28