Buzz around GM’s India exit gets loud

Company’s domestic operations have almost come to a standstill with market share dwindling below 1% Dealerships are on exit mode; no clear indication yet from company to dealers on product launches Dealers mull legal action in case compensation is denied

Speculation is gaining ground that US-based car major General Motors (GM) is contemplating exiting India in the context of the company’s fast reducing market share, now 0.94 per cent in the country.

Its dealers are in exit mode, with the carmaker not giving any indication on its product launches. Sources said GM could sell its Talegaon assets to a global player, which might contract-manufacture cars for it. A curious case is of dealerships: From 223 sales outlets in November 2015 to 168 outlets at present.

Sample this: Renault India, a late entrant to the Indian market, is planning to take the number of its dealers to 320 by the end of the year, from 270 now.

For GM, which sold 24,505 cars during April-February 2016-17, it works out to roughly 13 cars sold per outlet per month. Dealer sources say no dealership is viable if an outlet cannot sell at least 50 cars a month, even in the smallest of towns.

Industry sources said GM India had held a dealer council meeting in March. Though around 15 dealers are part of the council, around 45 anxious ones had turned up for the meeting. “No clear game plan was shared with the dealers about car launches, etc,” said a source.

A leading dealer who operates a network of outlets selling Chevrolet in a northern state said that he had been selling 10-15 cars per month.

“I am one of the best-performing dealers of GM in India. However, it is clear the company is not serious about its Indian operations. It has not initiated talks on a shutdown because it has to pay compensation to the dealers in that case,” he said.

Another dealer said: “If the company is trying to burn us out so that we resign on our own, we are ready to take the matter to the judiciary.”

On its part, the Federation of Automobile Dealers Association (FADA), the national automobile dealership body, has communicated to its members that the body could take up their case. As such, investment of around ~10 crore per dealer is stuck. That takes the total to ~1,6001,700 crore.

GM India has converted its Talegaon plant near Pune into an export hub. The plant is churning out the left-hand-drive Beat hatchback for the Mexico market. Meanwhile, its Halol plant in Gujarat is inching towards a shutdown, amid labour protests. Sources said the company was in talks with global auto majors, including Europe’s PSA Group.

“Both the companies are believed to have had discussions on the Talegaon asset, as the French carmaker bought the loss-making Opel division from GM recently. From what it seems, GM is looking at a deal by which the acquirer continues to contract-manufacture cars (for export markets) for GM in Talegaon,” said a source close to the development.

A GM India spokesperson said on e-mail: “As we have said many times, GM continues to believe in the growth potential of the Indian market. We will continue to closely monitor the market and evolve our product strategy accordingly. We do not respond to speculation…”

A mail sent to PSA Group did not elicit any response.