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GM hits India overdrive, to make it a global manufacturing hub

autos Updated: May 05, 2015 10:47 IST
Reuters
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General Motors will unleash a product blitz in India, aimed at reviving sagging sales, and will make the country a new global manufacturing and export hub, taking some of the strain off South Korea, where labour costs have ballooned in recent years.

“India may be the last big white sheet of paper in the automotive industry,” said Stefan Jacoby, GM’s chief of international operations.

The Detroit carmaker aims to grab at least 5% market share in India within the next decade, as it sees the market overtaking Japan as the world’s thirdbiggest with projected annual sales of 8 million vehicles by 2025.

“India’s going to become a key global production and export hub for GM,” said James Chao, Shanghai-based AsiaPacific MD at industry consultant IHS Automotive, noting India will partially replace South Korea as GM’s key Asian export base.

As part of a strategic plan due to be announced later this year, GM will launch newly designed subcompact cars in India.

India’s automobile market has been steady for the past few years, with annual sales of just above 3 million vehicles, but Jacoby sees that changing with Prime Minister Narendra Modi vowing to reboot Asia’s third-largest economy. “India has gained back confidence,” especially after Modi’s election, he said. “We see growth potential in India, and believe there’s a good opportunity for the Chevrolet brand to take share in this market,” he added.

GM has been realigning its global manufacturing operations to squeeze out profits. It has shuttered plants in Australia and Indonesia and plans to scale down operations in Thailand.

South Korea has for years been a low-cost export hub for GM, producing close to a fifth of its global output. But labour costs have risen by nearly half in just five years, pushing it into a high-cost bracket along with Japan.

“We have no concrete plans to close factories (in South Korea),” Jacoby said, but, to remain competitive, GM Korea must find ways to “drive efficiencies over time.”

By 2025, GM hopes to be selling 400,000 vehicles a year in India — a big jump on the 57,600 it sold last year. The auto major began exporting out of India last September, and shipped just 2,154 vehicles by March-end.

The targets also suggest GM will have to more than double production capacity in India to 570,000 cars a year, from the current 282,000.