General Motors To Stop Selling Cars In India

General Motors Co. said on Thursday that it will stop selling its Chevrolet vehicles in India by year-end, junking its plan to invest $1 billion in a market that the world’s third largest carmaker has failed to crack even two decades after launch.

GM has no plan to resume Chevrolet sales in India or bring in any new brand, said U.S.-based carmaker’s country head Kaher Kazem in a media conference call after the announcement. The company will continue to export vehicles from its plant at Talegaon in Maharashtra, he said.

The decision follows a “comprehensive review of future product plans for GM India” and is part of a global restructuring. It comes two years after Chief Executive Officer Mary Barra announced that the auto giant will invest $1 billion in India. But as sales fell and Barra focused on profits, the company first shuttered its Halol plant in Gujarat and has now decided to stop domestic sales. Its market share has fallen below 1 percent.

“We explored many options, but determined the increased investment originally planned for India would not deliver the returns of other significant global opportunities,” its statement quoted Stefan Jacoby, executive vice-president of GM International, as saying. “It would also not help us achieve a leadership position or compelling, long-term profitability in the domestic market.”

Before the company announced its decision, two people familiar with the development had told BloombergQuint that Kazem had visited the global headquarters to discuss the details.

The company sells three hatchbacks in India – the entry-level Spark, the Beat and the SAIL, which also has a sedan variant. It also has two multi-utility vehicles, the Enjoy and the Tavera. The Cruze sedan and the Trailblazer sports utility vehicle are its premium brands. However, only the Tavera managed to make a mark as far as sales are concerned.

The automaker will continue offering after-sales services and support to existing customers, the company said. Spare parts for existing models will be available “well beyond their warranty period”, Kazem said.

The decision to stop sales in India will impact 400 employees, or 8 percent of the total workforce, said Kazem. The company’s technical centre in Bengaluru will not be impacted by decision, he said. “We will support our affected customers, employees, dealers and suppliers.”

Kazem reiterated that the company will leverage India’s strong supply base for exports. “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.

General Motors has consolidated its production at Talegaon after ceasing manufacturing at Halol on April 28 this year. Negotiations continue on the asset sale at Halol, its statement said.

There is a possibility that French carmaker Peugeot could share the Talegaon plant once it returns to India, two people familiar with the development said requesting anonymity.