India set to be GM's global manufacturing hub

The American carmaker sees India replacing Japan as world's third-largest manufacturing hub

After shutting down its operations in Australia and Indonesia, and scaling down operations in Thailand, the American carmaker General Motors (GM) is set to unleash its new strategy to capture more market share in India. With implementation of this new plan, GM intends to achieve a market share of five per cent in India over the next decade. It sees the country overtaking Japan as the world’s third-largest vehicle manufacturing hub.
 
Under the new strategic plan, GM envisions capitalising on the relatively low labour costs in India and making the country its new global manufacturing and exporting hub, taking some strain off South Korea, where the labour costs have inflated by nearly a half over the past five years.

 
GM began rationalising its Korean operations a few years ago, but the company “needs to face reality in Korea,” news agency Reuters quoted Stephen Jacoby, GM’s chief of international operations, as saying. Jacoby was also quoted as saying that the power of the labour unions was a “huge challenge” for GM and, more broadly, an issue for South Korea’s competitiveness. “India might be the last big white sheet of paper in the automotive industry.”
 

The move is aimed at making up for the losses that GM has suffered in the past 18 years here. To meet its objective, GM will unleash a product blitz to revive the sagging sales in India. Also, the company intends to convert the component making ratio to almost 70 per cent local which will make cars more affordable.

 
The shift is happening at a time when investors are looking confident. Since Prime Minister Narendra Modi assumed office in May last year, India is seen as gaining in confidence as an investment destination.
 
After Ford Motors’ and Nissan Motors’ strategy shifts, GM’s is the third such plan but remains to be announced. In the first leg of the new plan, GM already plans to launch two “image building” models in India — the Trailblazer SUV, due in the second half of this year, and the Spin multi-purpose van, due next year.