GM Puts India Investment Plan on Hold
July 25 2016 - 5:04PM
Dow Jones News
By Santanu Choudhury and Gautham Nagesh
General Motors Co. has put a $1 billion India investment plan on
hold as it reshuffles its product plan to better meet changing
consumer tastes and jump-start its sluggish performance in the fast
growing market.
A company spokeswoman said Monday that GM will no longer plan on
launching Chevrolet Spin minivan in India and will instead focus on
the fast-growing sport-utility vehicle market in India. Regulatory
uncertainty is also giving the Detroit auto maker reason to
re-evaluate its strategy, she said.
"We are conducting a full review of our future product program
in India, " the spokeswoman said. "We are also putting on hold
future investment in our all-new vehicle family in India until we
firm up our product portfolio plan."
The review was earlier reported by Reuters.
India is the latest in a series of markets where GM has
restructured its approach under Chief Executive Mary Barra. It has
pulled out of some markets, including most of Russia, and dialed
back sales of certain types of lower-margin vehicles in the U.S.
and Europe. Production in Korea, Brazil and other markets has been
shifted or is being evaluated.
India, forecast to eventually become among the biggest in the
world by 2020, has been difficult for GM to crack. While domestic
manufacturers have long dominated the market, certain foreign
brands, including Hyundai Motor Co., have made significant progress
while investing heavily in SUV production.
GM was one of the first entrants in the Indian auto market when
it began operations in 1996. But the company has been a laggard and
trails every major auto maker including Ford Motor Co., Suzuki
Motor Corp. and Toyota Motor Corp.
GM's market share in India through the first six months of 2016
was 0.9% vs. 1.4% for the first half of 2015
Last July GM announced its plan to invest $1 billion in India to
introduce a new low-cost vehicle platform with its Chinese partner
SAIC Motor Corp. for emerging markets that is aimed to spawn 10 new
vehicle models over five years. GM will shift its focus toward
SUVs, which have become the preferred choice for many newly
affluent Indians who must tackle potholed roads in much of the
country.
GM will proceed with its plan to launch the new Beat hatchback,
Essentia compact sedan, Cruze sedan, and the Beat Activ
hatchback.
Part of GM's plans unveiled last year included closing its
factory at Halol, in the western state of Gujarat, while expanding
capacity at its plant at Talegaon, in Maharashtra state to 220,000
vehicles a year.
Write to Santanu Choudhury at santanu.choudhury@wsj.com and
Gautham Nagesh at gautham.nagesh@wsj.com
(END) Dow Jones Newswires
July 25, 2016 16:49 ET (20:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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