GM re-evaluates India investment, new car platform on hold

NEW DELHI (Reuters) - General Motors GM.N is re-evaluating its planned $1 billion investment in India and has put on hold moves to bring a new car platform to the country, company officials said.

Employees work inside the General Motors plant in Talegaon, about 118 km (73 miles) from Mumbai September 4, 2012. REUTERS/Danish Siddiqui

The strategy rethink comes after GM’s India sales fell by nearly 40 percent in the year to March 30, with its share of the domestic passenger vehicle market now below 1 percent. Sagging sales and a regulatory crackdown on diesel-powered vehicles are now forcing GM to redraw revise its plans.

The U.S. automaker had previously committed to investing $1 billion in India to double its market share to 3.6 percent by 2020 and make the country a global export hub.

“The billion dollars was committed based on a certain product portfolio,” Jack Uppal, vice president for marketing at GM India, told Reuters.

“As the product program could change, the amounts that are required to invest would also change.”

GM’s original $1 billion plan included, among other things, the launch of a multi-purpose vehicle, Spin, and a new modular platform designed to build low-cost cars for emerging markets.

“We are conducting a full review of our future product program in India,” Swati Bhattacharya, a spokeswoman at GM India, said in a statement.

“As a result, we are also putting on hold future investment in our all-new vehicle family in India until we firm our product portfolio plan.”

The new platform would have helped GM price cars more competitively in a market where buyers prefer low-cost vehicles and which is dominated by Maruti Suzuki India MRTI.NS and Hyundai 005380.KS.

Uppal said that fast-changing buyer preferences in India also mean that by the time the platform comes in it might be too late to launch some of the planned products. Instead of launching the Spin in 2017, GM is focused on bringing a compact SUV to India soon and is now reviewing existing global products to see which works best, he said.

GM still plans to launch small cars such as the Beat Activ hatchback and Essentia compact sedan in 2017, as it attempts to bolster sales.


GM’s looming change in its India strategy follows a series of reviews and restructurings undertaken across Asia Pacific starting in 2013 under Stefan Jacoby, vice president, GM International (GMI), which oversees markets beyond the Americas, Europe and China.

Last year GM said it was shuttering a key assembly plant in Indonesia and ceasing production of its Chevrolet Sonic car in Thailand to focus more on SUVs and pick-up trucks in Southeast Asia.

GM announced last week that the company and Isuzu Motor 7202.T have agreed to end a tie-up in Asia, while GM's finance chief said on an investor call that the company would only deploy funds if it sees an "appropriate return."

In India, GM posted a net loss of 10.33 billion rupees ($154 million) in the year to March 30, adding to losses made in the preceding three financial years, according to government data.

GM is not the only foreign company battling to crack an Indian car market forecast to be the world's third largest by 2020. Volkswagen VOWG_p.DE, Nissan 7201.T and others have also struggled to raise market share significantly.

Additional reporting by Norihiko Shirouzu in Beijing and Joe White in Detroit; Editing by Euan Rocha, Raissa Kasolowsky and David Goodman