GM re-looks at India investments; Ford says no change of tracks
Regulatory uncertainties, shifting preference of buyers and a slow uptick in demand are making some car makers review their India plans.
American car maker GM, which has a sub one per cent share in the domestic market, will review part of its $1-billion investment announced a year ago.
Pointing to the contracting multipurpose vehicle (MPV) segment and a growing SUV segment, a GM India spokesperson said the industry was also facing ‘unprecedented regulatory uncertainty’. There has been action against diesel vehicles and the government has set aggressive emission targets for automobiles.
“We are conducting a full review of our future product programme in India. GM will continue with its next family of vehicles in global growth markets. However, the sourcing of components for India is being put on hold while we conduct a full review of our future product programme. As a result, 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 spokesperson said.
A year ago, GM’s global chief executive Mary Barra announced an investment of $1 billion in expansion of capacity and new products. While regulatory uncertainty is a reason, GM has had other challenges in the form of limited success of its products. Its decision to close the Halol plant by June 30 this year also faced issues. The firm has said it will continue production at the Gujarat unit till March next year.
Ford, another American car maker, said it was committed to bringing in products that Indian customers wanted at the most opportune time. “The fact that Mustang was introduced in India in the very first year of its global availability, including in the right-hand drive markets, speaks volumes about our commitment and understanding of the evolving Indian consumer,” said a Ford spokesperson.
Ford has reversed its decline in India sales. For the three months ended June 30, the company increased its India sales by 50 per cent to 21,780 units. Ford said it was looking to play a pivotal role in the next phase of growth in India’s automotive industry, which is expected to grow to 5.4 million vehicles by 2020.
The Ford spokesperson said lukewarm growth in the automotive industry had not deterred the company from continuing to evaluate new segments and subsegments. “These include our work on finding the right products in the existing B-Segment for SUV, MPV or crossover with alternate fuel types and technologies,” he added.
Companies like GM and Ford, which are global leaders in automobiles, are stuck with single digit shares in the 2.78 million unit (annual) domestic car market where two players Maruti Suzuki and Hyundai dominate with a 64 per cent share. The small market share is also accompanied by loss-making operations.