GM India to cease domestic operations by end-2017, to focus only on exports

GM India to cease domestic operations by end-2017, to focus only on exports

GM India to cease domestic operations

General Motors India has today formally announced that the company will cease sales in the domestic market by the end of 2017, and will focus only on its manufacturing operations for exports. This decision has been taken on the basis of a comprehensive review of its product portfolio, and is part of a series of actions taken by General Motors to address the performance of its operations worldwide. ‘Through the review, which began in June 2016, the company determined that its greatest opportunity in India is to drive shareholder returns, which rests on focusing on exports from India,’ says a press note issued by GM India.

“We explored many options, but determined the increased investment originally planned for India would not deliver the returns of other significant global opportunities. It would also not help us achieve a leadership position or compelling, long-term profitability in the domestic market. Difficult as it has been to reach this decision, it is the right outcome to support our global strategy and deliver appropriate returns for our shareholders,” said Stefan Jacoby, GM executive vice president and president of GM International.

While GM ceased manufacturing at its Halol assembly plant in April this year and continues to negotiate the sale of its assets at that location, it will continue to operate its assembly plant at Talegaon, where it will manufacture cars for export markets. “GM India’s export business has tripled over the past year. Exports will remain our focus going forward as we continue to leverage India’s strong supply base,” said Kaher Kazem, GM India president and managing director. “We will support our affected customers, employees, dealers and suppliers. Chevrolet owners can be assured that we will continue to honor all warranties and provide comprehensive aftersales support,” he added.


Update: ATR was on a conference call with Kaher Kazem, GM India President & MD, who answered a few media queries regarding the company’s announcement of stopping sales in India from end-2017. These are some details revealed by Kazem.

According to GM India, 90 % of its production was already being exported from India (with 70,000 units having been exported last year), and after the company stops selling Chevrolet cars in the domestic market, this figure will go up to 100 %. About 400 GMI employees will be affected by the company’s decision to stop sales in the domestic market – this is about 8 % of the GMI workforce in India. However, the company plans to offer a generous severance package to its employees.

The General Motors Technical Centre (GMTC) will not be affected by the company’s decision to stop sales in India, and its 2,500 employees will continue to perform R&D operations that are relevant for GM’s global operations. Employees at GMI’s Talegaon facility will also not be affected, since the company will continue to manufacture cars there for export markets. Regarding the future of GMI’s Halol facility, things are still under negotiation and plans will be revealed in due course of time.

GMI will continue to honour 3- and 5-year warranties on Chevrolet cars sold in India, even after the company ceases sales operations in the domestic market at the end of this year. The company will continue to operate a sufficient number of its service outlets (exact number not revealed), spare parts will continue to be available for the foreseeable future and the company is in confidential talks with its 150-strong dealer network for implementing a transition plan.

General Motors will not consider resuming sales operations in India and has no plans of bringing in any other brands from its global portfolio, to India. The company will not reveal the exact amount of its accumulated losses from its India operations, but will continue to source parts from Indian vendors and suppliers for the cars that it will manufacture at Talegaon, for export markets.

GMI did not provide a direct response to questions about providing refunds to those who may have booked a Chevrolet vehicle in the last few days or weeks, and who may now want a full refund. The company may make its stance clear on this issue after it has completed discussions with its dealer network.

Author: Anwesh Koley