Battling for a foothold in the highly competitive Indian market 22 years after making an entry here, US-based auto manufacturer General Motors today announced that it would stop selling cars in India and would instead focus on manufacturing and exporting cars from the country.
The decision was announced as part of a series of restructuring actions from the Detroit automaker and marks a significant blow to India's strategy of encouraging domestic manufacturing.
The company, in a statement issued here, said that it will now focus on exporting vehicles from its manufacturing plant at Talegoaon in Maharashtra after it stopped production at its first plant at Halol in Gujarat last month.
The decision follows a comprehensive review of future product plans for GM India and is part of a series of actions taken by General Motors to address the performance of its operations worldwide, the company said in a statement.
It has also exited from four other international markets, including Russia and Europe.
GM Executive Vice President and President of GM International Stefan Jacoby said that after exploring many options the company determined that the increased investment originally planned for India would not deliver the returns of other significant global opportunities.
"It would also not help us achieve a leadership position or compelling, long-term profitability in the domestic market," he added.
GM sales in India were down nearly 21 per cent in 2016-17 to 25,823 units. Its production however grew about 16 per cent to 83,368 units most of which were exported.
In 2015, GM had announced plans to invest USD 1 billion to enhance manufacturing operations and roll out 10 locally produced models in India while deciding to stop production at its first plant at Halol in Gujarat.
However, struggling to make a turnaround in India, the company put on hold the plan and undertook a full review of its future product portfolio here.
"Difficult as it has been to reach this decision, it is the right outcome to support our global strategy and deliver appropriate returns for our shareholders, Jacoby said.
The company informed employees of General Motors India about the decision. It, however, did not disclose how many of the would be affected by the development.
Sources, however, said the decision would affect a minimum of 200 employees.
GM India President and Managing Director Kaher Kazem said going forward focus for the company's manufacturing base at Talegaon would be "export markets, upcoming export vehicle launches and exploring longer-term strategic options".
"Exports will remain our focus going forward as we continue to leverage India s strong supply base," he said, adding that recently new Chevrolet Beat hatchback was exported to Mexico and Central and South American markets and will launch Chevrolet Beat sedan later this year for those markets.
GM India's export business has tripled over the past year, Kazem added.
GM sells Chevrolet brand of vehicles in India.
Last month the company had stopped production at the Halol plant, a move that affected around 1,100 employees.
The Halol unit, which had a total annual manufacturing capacity of 1.1 lakh units annually, was originally planned to be shut by mid-2016.
GM has been in talks with China's SAIC Motor Corporation to sell the plant.
A term sheet was signed a few months back to evaluate a possible deal but the Chinese firm stated that a final takeover would be subject to government approvals, settlement of labour and all other pending issues by the American auto major.
With PTI Inputs