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Bankruptcy fears hit GM India sales

autos Updated: Apr 11, 2009 01:07 IST
Sumant Banerji

With bankruptcy looming large on US automaker General Motors (GM), its Indian subsidiary has suffered a sharp decline in sales.

The Wall Street Journal on April 9 reported that the world's second largest automaker may “successfully negotiate cost cutting concessions with unions and bondholders but is more likely to reorganise by filing for bankruptcy.”

The sales of GM India —which makes Captiva, Spark, Aveo U-VA and Optra — grew by 6.7 per cent during April-October 2008. But as talks of an impending chapter 11 filing gained ground, sales plummeted 25.3 per cent in the November 2008 to March 2009.

The industry sales fell by 5.8 per cent during this period.

“Customers have been asking us what happens if GM goes bankrupt in the US and we have been trying to convince them that we are safe,” said a sales executive at Regent Automobiles, one of GM’s biggest dealerships in Delhi, India’s biggest car market.

With the South Korean automaker Daewoo that collapsed in November 2000 (GM bought it over in September 2001) still fresh in the minds of consumers here, GM India is feeling the heat.

The company denied the bankruptcy correlation. “Investments and expansions have been made and our plans are on track,” said P. Balendran, senior vice-president (corporate communications), GM India.

“Whatever decline in sales we have suffered is due to the global recession that has impacted everybody. I don’t think there is any negative perception in the market about our future as we are growing sequentially.”