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General Motors in India, what went wrong?

By   |   19 May,2017

General Motors India today announced that it will exit from the Indian market with domestic sales to be stopped from this year. This statement has finally brought an end to the endless speculation about its future in India. As of now, GM has exited the Indian market but not India as its Talegaon Assembly Plant will remain an export hub. This is a decision that may seem shocking but it is something that GM should have taken some time back. Till recently however the mood was to get GM back on track with new launches. The new Beat was to be launched soon and even a media drive was to take place. Like you had seen at the Auto Expo, there were plans for the compact sedan and crossover version of the Beat too.

So what led to this decision? Well it did a full review of its India plans and finally decided that it is best to concentrate on exports- which over the past few years has tripled. Simply put the investment that was planned for India would never yield a corresponding return. GM exiting the Indian market has also come at a time when it is trimming its footprint worldwide too. Just some time back, GM sold its European operations to the PSA group which meant selling its Opel and Vauxhall brands. Just like India, Europe was in loss for GM since its product range, investments required were huge, thus it had no choice but to exit.

For GM it will focus on China and of course the US where it has been doing very well. In its home market, profit margins increased owing to better sales of its pick-up trucks and other cars. In China, Buick, its luxury brand is doing really well. Thus while in 2015 GM announced a 1 billion investment in India, sadly, the Indian operations has fallen prey to its global restructuring. However in India, many years back, initially with Opel brand being shown the door, the Chevrolet brand gained some steam with the well received Optra and later the Spark and Beat which were good products that did well. However later with issues like the massive Tavera recall or even other recalls, hurt the brand image plus not launching new cars or updating their products regularly eventually led to this. The Sail was a weak product and the Enjoy, even more so, the expensive (when launched) Trailblazer could not bring in the desired numbers.

The compact SUV Trax would have done well in India had it been launched and products like SUVs (below Rs 15 lakh) would have hit the pulse of the market. The Trax was deemed too expensive and Chevy decided to give focus to the under 4m segment. Thus many factors led to GM closing its doors on its India sales but while it is a tough decision, they have taken the right one.

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