GM Quits India, South Africa

Chevrolet Beat car on an assembly line at the General Motors plant in Talegaon

GM Quits India, South Africa

One of the earlier foreign entrants in the Indian automobile market, General Motors (GM) has made a decision to call it quits.

Executive Vice President and President of GM International Stefan Jacoby said that after exploring many options the company determined that the increased investment originally planned for India would not deliver the returns of other significant global opportunities.

General Motors (GM) has announced that it will stop making cars for the Indian market by the end of 2017.

GM has announced similar plans for South and East African markets as part of its global business restructuring. "We recently launched the new Chevrolet Beat hatchback for export to Mexico and Central and South American markets and will launch the Chevrolet Beat sedan later this year for those markets".

Its Chevy brand has just one percent of the India market. 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.

According to Kaher Kazem, president and MD of GM India, though the company's exports have increased over past years, the increased investment required for extensive and flexible product portfolio would not deliver a leadership position or long-term profitability in the domestic market and this was the reason the company management made a decision to back out from India as part of its worldwide restructuring measure.

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"Exports will remain our focus going forward as we continue to leverage India's strong supply base". But its market share fell to below 1 percent in the year ended March 31 from 1.17 percent the previous year - even as India's market grew 9 percent to climb above the 3 million vehicle level. It would also not help us achieve a leadership position or compelling, long-term profitability in the domestic market.

Singapore: GM International will streamline its regional headquarters office in Singapore, which will retain responsibility for strategic oversight of the remaining regional business and markets, including Australia and New Zealand, India, Korea and Southeast Asia.

"We will support our affected customers, employees, dealers and suppliers".

As a result of these actions, GM expects to realize annual savings of approximately $100 million and plans to take a charge of approximately $500 million in the second quarter of 2017. About $200 million of the special charge will be cash expenses, according to a press release from the automaker. The Chevrolet brand sells the Spark, Cruze, Captiva, Trailblazer and Utility in South Africa.

GM's restructuring also affected India, where its Talegaon manufacturing facility will in future focus only on producing vehicles for export with GM also ceasing sales of Chevrolet in that market by the end of this year.

Volvo's decision to start assembly in India and market its vehicles as "Made in India" follows an initiative by the national government, which seeks to highlight and promote the country's manufacturing expertise.

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