CEO Barra Unveils Plans For $1Bn Investments, 10 New Models For Revival
General Motors on Wednesday sought to make a renewed push to turn around its struggling Indian operations and announced a fresh $1 billion (Rs 6,400 crore) investment, while rationalizing its operations by shutting down its first plant in the country , at Halol in Gujarat. The company plans expansion at its Talegaon plant in Maharashtra, which will roll out new products for the domestic market as well as key emerging economies.
In an interview with TOI, GM CEO Mary Barra, first woman at the helm of an auto major, acknowledged that the company needs to “gain the trust of Indian buyers“ as repeated car recalls have hit the brand hard in the market. “It is difficult, but we will have to win the trust of customers. India is a strategic market and a key to our success globally ,“ Barra said. “GM cannot remain a global leader without making a serious investment towards expanding our presence in growth markets like India.“
The company has had a poor run in over two decades of its presence here, cornering a mere 2% share of the pie when others such as Korea's Hyundai, Japan's Honda and market leader Maruti (subsidiary of Japan's Suzuki) have gained and further consolidated their positions. In fact, this was the fifth straight year when GM's market share declined.
Barra conceded that the going will be tough, but said that plans for as many as 10 new models under the Chevrolet badge have the potential to turn things around. While the first of these offerings, the TrailBlazer SUV that comes in as a fullybuilt import from Thailand, debuts in October this year, others will be locally produced. The list includes a new MPV -Spin (coming in 2017) -a hatchback and a mini sedan version of the current `Beat' compact, as well as a mini SUV . By 2020, the company plans to have a completely new product lineup at its showrooms with the oldest vehicle being less than three years old.
But what prompted the company to shut down the Gujarat plant at a time when others such as Maruti Suzuki, Tata Motors and GM's compatriot Ford, are rushing to the state, billed as India's answer to Detroit? Barra says that by having a single manufacturing location, the company will consolidate and rationalize its operations to kick-in efficiencies and economies of scale.
Currently, GM utilizes less than 30% of its annual installed capacity of about 2.8 lakh vehicles. The American auto giant which sold 56,700 vehicles in 2014 and hopes that production at a single location will help it cut down on avoidable operational costs.
Around 1,100 employees at Halol face job losses, although GM said that some of them may be absorbed when it undertakes expansion at Talegaon. Annual capacity at Halol is 1.1 lakh vehicles. Barra met Prime Minister Narendra Modi during the day , but refused comment on how the former Gujarat chief minister reacted over Halol's closure.
GM has not been able to register profits in India so far and its accumulated losses stand at around Rs 3,800 crore.Barra said there will be increased focus on driving in localization that will help in controlling production costs.
A big focus on exports is also aimed at cutting down dependence on the local market.
