Though not exactly a secret, it’s not widely-known that General Motors has been stumbling in India. This year to March, GM India has lost 38.5 billion rupees ($581 million), a rather concerning figure given that India is expected to become the world’s third-largest auto market by the year 2020. But The General is looking to turn around its performance in the country, targeting profitability over the next five years.
“But how?”, you might ask. Below, we outline the three primary initiatives General Motors is undertaking to bring its Indian operations into the black.
1. Investment & Growth
In July, General Motors announced plans to invest $1 billion in its Indian operations. The investment will go towards:
- Strengthening the Chevrolet brand by growing the dealer network in India (currently, GM only sells Chevrolet vehicles in India)
- Bringing 10 new vehicles to market over the next five years
- Building the new product locally with 70 percent of local parts compared to an amount much lower than today
In fact, GM is looking to these new domestically-made products to double its market share from the 1.8 percent market share it had in 2014.
GM India is also instituting several cost-cutting measures.
It recently moved its local corporate headquarters in India to a different location in the same city, enabling it to save 50 percent in rent and office expenditures. The savings add up to $500,000 a year, according to GM India director, Arvind Saxena.
3. Export Hub
Making India an export hub of sorts is the third pillar of GM’s strategy to turn around its operations in the country. GM has already been exporting Indian-built vehicles to Chile, and recently began exporting vehicles to Mexico from India.
Exporting from India will help increase total annual exports for GM India for calendar year 2015 to 20,000 units, and GM expects to double that amount to over 40,000 units at the end of 2016.
In the future, it’s also possible that GM India will export vehicles to parts of north and South Africa, along with various countries in Asia as well.
“We need to have a more sustainable and committed business. It would take time and would be a combination of all the activities that we do,” says Saxena said. He said that GM will focus on exports until domestic sales come back around.
The GM Authority Take
At last, GM appears to be treating India as an important part of its business, rather than a poorly-managed offshoot far, far away from Detroit. It now has a new management team ready and capable of executing what appears to be a solid all-around strategy that will contribute to GM’s bottom line in a positive fashion.