With accumulated losses from India operations reaching over Rs.2,740 crore, General Motors on Wednesday said it would shut down its manufacturing plant in Gujarat to consolidate operations. The American auto maker, however, announced plans to invest $1 billion in the country, majority of which will go into its plant in Maharashtra.
The company also said it would launch 10 new models under the Chevrolet brand in the next five years as part of plans to turnaround its fortunes in the country.
“Chevrolet is committed to India for the long-term. We want to have a sustainable, profitable business here. India is a very important market,” General Motors CEO Mary Barra, who also met Prime Minister Narendra Modi earlier in the day to brief him of Chevrolet’s India plans, said.
While production at the Halol plant in Gujarat will be stopped by the second half of 2016, the company aims to strengthen its Talegaon plant in Maharashtra to not only cater to domestic demand but also make it an export hub.
GM India President and Managing Director Arvind Saxena said the company was looking at consolidating and building one strong manufacturing base. “Consolidating our manufacturing in a single location in India will support the long-term sustainability of our business in a challenging emerging market. This is not a decision that we are making lightly and we are committed to treating those impacted respectfully,” he added.
The Talegaon plant was a better bet for the company as it is much newer that the Halol plant and has powertrain (engine and gearbox) capabilities in addition to assembly lines.
General Motors, which started operations in India in 1996, was one of the first automakers to enter Gujarat. The move will affect 1,100 employees at the Halol plant that has a total annual manufacturing capacity of 1.1 lakh units annually. The capacity at plant in Maharashtra is about 1.3 lakh units now, which will be ramped up to 2.20 lakh units. The company said this would lead to creation of about 12,000 jobs and those employed at Halol would given opportunity to apply for jobs here.
The company has not taken a decision yet if it plans to sell off the Halol plant or put on to lease.
Talking about the investments, Ms. Barra said it was part of $5 billion investment that the American firm had earmarked to strengthen business in markets such as India, China, Mexico and Brazil.
With business plans in place, the company is targeting to double its market share in India by 2020, she added. General Motor had a market share of 1.8 per cent in 2014 when it sold 56,700 units.
