GM to stop selling vehicles in India, focus now on exports

General Motors to stop selling cars in India but to keep manufacturing centre

Battling for a foothold in the highly competitive Indian market 22 years after making an entry here, US-based auto manufacturer General Motors today announced that it would stop selling cars in India and would instead focus on manufacturing and exporting cars from the country.

The decisions to significantly scale down GM's operations in India are results of months of analysis over "where we are going to place our bets (globally) as a company", Ammann said in an interview. "Although tough, it was a necessary decision", adding that this move effectively kills the company's plans to introduce more models in India this year.

General Motors' India unit will still produce vehicles, but only for export.

GM sold its cars in India under the Chevrolet brand. India started its India operations in 1996 and has so far invested over a billion dollar.

Chevrolet will exit both markets by the year's end. GM said its exports in India have tripled over the past year so that will remain its focus. Its production, however, grew about 16 per cent to 83,368 units most of which were exported. The vehicles exported now include the Beat hatchback but will soon also export the Essentia sedan.

Stefan Jacoby, Executive Vice President and President of GM International, said the company had explored various options, but felt that increased investment in India would not deliver the kind of returns on offere elsewhere.

"We will also probe whether this is not an agenda by the auto company to dump the remainder of its cars on the South African market", says Jim.

The announcement was made amid a series of restructuring moves GM has unveiled today, following a review of operations in its worldwide markets. The hedge fund holds 54.8 million GM shares, or about 3.5 percent of the total.

Having a large facility in India and seeing good demand for its cars in other markets, the company will now continue to manufacture from its Talegaon plant for exports only.

"We will honor all our commitments to customers, this includes our after sales service agreements to them". We will support our affected customers, employees, dealers and suppliers. In terms of Opel, GM will work with PSA to develop the future strategy for the Opel brand in SA but details will only be announced at a later stage. Exports for GM India will continue through its Talegaon plant located in Pune. Media reports suggest that it is negotiating with Shanghai Automotive Industry Corporation of China, its JV partner in China, for a possible sale of the plant.

GM also said it will pull out of the East African region by selling a 57.7 percent stake to Isuzu and trimming an unspecified number of employees in Singapore, home to the GM International Operations division that oversees all foreign markets save for South America and China.

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