General Motors Expects To Become Profitable In India In Five Years
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General Motors expects to make its Indian operations profitable in a period of five years as it works to cuts costs and increases the amount of locally-produced content of its vehicles.
That much is according to managing director of GM India Arvind Saxena, who told Reuters in an interview that, “In the next five years, I should definitely make it to a green balance sheet.”
GM has been operating in India for two decades, selling small Chevrolet vehicles. During that time, the automaker’s sales have fallen, causing it to be unprofitable in the market. In the year to March, GM has posted a loss of 38.5 billion rupees ($581 million) in India.
Saxena is part of the new management team at GM India, which include a new Chief Operations Officer, Vice President Of Sales, and Vice President Of Marketing And Customer Experience.
The importance of India for carmakers is undeniable, as the market is expected to be the third largest in the world by 2020. Sales of passenger cars in India rose 5 percent for the year through the end of March, but global automakers such as Renault, GM, Volkswagen, and Ford all reported double-digit declines in sales. Maruti Suzuki and Hyundai Motor were able to capitalize on the rising sales.
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My , my , my….finally GM smartens up and gets locally produced content. I’m sure that means design as well and is long overdue . GM kept throwing at the Indian people what GM wanted to sell them . I can visualize the management extolling the Korean produced Spark and making the big decision to send it to India….where , of course , it bombed , tanked , pick your favorite adjective ! They hadn’t the intelligence , perhaps , to ask the question ” is this a timely product that meets the needs of the buying public and is it a design and quality that approximates the top sellers there ” ?
Something tells me the bean counters had a big part of the decision making process ! Now GM in India looks ahead 5 years to become relevant (successful)….so the top selling competition in India have another 3-5 years to build on their already strong popularity and customer satisfaction . This , to me , is sounding a lot like the Cadillac division….just wait till 2020 , we will be selling 500,000 worldwide. The old expression ” if wishes were horses , beggars would ride ” , comes to mind .
GM loosing money in India is uncalled for, and something fixable in faster than five years.
India is note important than China due to the economic freedom of not requiring joint ventures.
Chevrolet can easily be fixed through a combo of small Chevrolet and Opel vehicles.
I also think that building Vauxhall as a Ford fighting premium brand would be wise in the longer term.
It’s less so about the product, Stephen. The vehicles available in India now are very competitive with the market (Cruze, Captiva, Beat on the medium end of the market, and the Spark, Tavera, and Sail on the low-end). The problem is:
1. Marketing: not enough
2. Dealer network: not enough dealers, which makes consumers lose confidence in servicing their vehicle
3. Manufacturing: not enough local parts content = higher cost of vehicles vs. competitors
4. Reputation: Chevy has decent reputation but is seen as a boutique brand compared to Hyundai and Suzuki
5. Lack of direction from high-end management to fix the above; the management team before Arvind Saxena was downright terrible. Not sure what they did, if anything to grow the brand, sales, etc. Seems like they all just blamed slumping sales on the economy or external conditions. Glad (most of them) got the boot.
It’s hard to financially justify the large sudden capital expenditure to re-engineer and re-certify all those models on a market where you are only selling 3000-5000 units per month total.
To turn things around is going to be a slow grind and not a quick expensive fix.