Thursday, 25 May, 2017

Chevrolet to pull out of India, South Africa

GM to stop selling cars in India but not pulling out General Motors to cease sales operations in India by 2017
Connie Andrews | 19 May, 2017, 03:56

General Motors Company (NYSE:GM) is nixing most of its operations in India, after failing to drive meaningful growth in the world's second largest country. Since then, we've seen GM pull Chevrolet out of Europe, sell Opel to France's PSA Group, and announce the end of manufacturing in Australia.

But it doesn't plan to leave India entirely. Although it will stop selling cars in the country, GM will continue to operate its tech centre in Bengaluru while its Talegaon plant in Maharashtra will be converted into an export-only factory.

"After a thorough assessment of our South African operations, we believe it is best for Isuzu to integrate our light commercial vehicle manufacturing operations into its African business", Stefan Jacoby, GM Executive Vice-President and President of GM International, said in a statement. GM said its exports in India have tripled over the past year so that will remain its focus.

The company says it aims to be out of the country by the end of this year.

The American major, which had begun operations in the country 21 years ago, is to focus exclusively on exports, which have seen an uptick in recent years.

Reuters reports that these moves, which are expected to result in a $500 million charge in the second quarter, are created to save the company $100 million a year, freeing up cash to bolster its presence in more lucrative markets and making more funds available to invest in future technology.

While it is unfortunate that a global automaker like GM has to exit, opportunities certainly exist for global automakers in India, Sharma said.

GM is the third-largest auto producer in the world.

The decision is a culmination of the company's comprehensive future product plans, and the misalignment of its original investment plans and the market opportunity here.

The giant has said it is investing around $600m a year as it ramps up efforts to develop driverless vehicles.

Though the shift will see Chevrolet vehicles phased out in both South Africa and India, the company will maintain its manufacturing operations in Talegaon, India. By the time GM felt confident enough to sell these cars in India, unfortunately for them the market and the consumer had matured a lot more than they thought they understood.

Jim said there were more than 1,000 employees at GM, 500 of them based in the Chevrolet division. Its market share was a meagre 0.85 percent. Its first stint in India dates back to 1928 when it assembled cars, buses and trucks under the Chevrolet brand. Kazem said GMTC-I performs global work for GM and is not impacted by today's announcement. "This decision will impact around 400 employees, which is just about 8 per cent of total GM India employees", he said. The other was to team up with a local partner to run full operations as an automaker designing products and manufacturing and marketing products locally.

"They acted unilaterally and did not inform the union of this decision", Jim said. About $200 million of the special charge will be cash expenses.

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