General Motors to invest $1bn, introduce 10 new vehicles in India

US auto major General Motors on Wednesday announced a turnaround plan entailing fresh investment of $1 billion (`6,400 crore) after struggling for nearly two decades in India.

The company would also stop production at its Gujarat plant to consolidate manufacturing operations in Maharashtra and plans to roll out 10 locally produced models, including SUV Trailblazer and multi-purpose vehicle Spin, from the Chevrolet family in the next five years 

“We want to have a sustainable, profitable business in India. So we had to really do it differently (from how it was done in the past)... I think we are making the necessary changes in India for the long term with a business that has sustained profit,” General Motors CEO Mary Barra told the news agency PTI.

Stressing that GM is in India for the long haul, she said: “The commitment we are making to have 10 new vehicles into the market place in the next five years, all focused on the customer I think speaks about the commitment we are making to the country.”

On the investment front, Barra said yesterday GM had announced a total investment of $5 billion to strengthen business in growth markets in India, China, Mexico and Brazil through the development of a new family of vehicles and “one-fifth of that investment will be in India”.

The majority of the investment will go into strengthening of the Talegaon plant for localisation and capacity enhancement to meet additional products for domestic and export markets.

General Motors has been in India since 1996, starting production at the Halol plant, and has invested around a billion dollars so far in the country. As of last year, it reportedly had accumulated a loss of `2,740 crore in its nearly two decades of existence in India.

Justifying further investments in India, she said: “At General Motors we have focus on generating superior returns to our shareholders.

“So as we are investing a significant amount of money in India, a billion dollars, we are committing that we are going to generate appropriate return for our shareholders and lay the foundation to participate in further growth in India because we believe India is a very important market that has substantial growth opportunities and it is very important for GM to be here and we are doing that.”

Commenting on the company’s decision to cease production at Halol, she said: “The important thing was to consolidate and really focus on one strong manufacturing base and our Talegaon facility has not only assembly plant but (also has) powertrain plant.”

As per the company’s plans, the Halol plant in Gujarat will stop production by the second half of 2016, while the Talegaon plant in Maharashtra will be strengthened and become an export hub.

The move will affect 1,100 employees at the Halol plant that has a total annual manufacturing capacity of 1.1 lakh units annually.  On the other hand, General Motors will increase capacity of the Talegaon plant to 2.2 lakh from its current 1.3 lakh units annually. 

It will create 12,000 jobs for GM India and its suppliers, the company said.

General Motors India President and Managing Director Arvind Saxena said the company has communicated with the employees at the Halol plant about the decision to stop production there and they would be given opportunity to apply at the Talegaon plant.

He said the company was looking at various alternatives to find good solution for the Halol plant.

“We will continue to maintain supply base in that area that will also be critical part of our India operations,” Barra said.

Earlier in the day, Barra along with General Motors Executive Vice-President and GM International President Stefan Jacoby and Saxena had met Prime Minister Narendra Modi to brief him of Chevrolet’s plans in India.

“We had a very constructive meeting. We were able to share the good news about making an investment of $1 billion and along term commitment to India,” she said.

Bullish on the Indian market, Barra said: “The passenger vehicles market in India is expected to grow to 8 million units (annually) by 2025 from the current 3 million and we want to be a part of that growth.”