Source: The Security Ledger

General Motors has been a laggard in the Indian market with average sale of less than 900 vehicles per month. The U.S.-based car maker wrote to its 150-some dealers on 28th April that they are preparing to release the new gen car – the small car ‘Beat’.

Why the exit of GM could be a big mistake?

A brochure that was mailed to dealers read “This July, be ready for the Mobility revolution with the New Beat MCM from Chevrolet.” Rumors about a big announcement by GM India were in fire in the first week of May. The rumors were of possible exit of the automaker from the Indian market.

This was not the first time that such rumors were surfacing in India but the automaker had always refused those rumors, according to dealers. The dealers also said that no one thought that the company would ever leave one of the fastest growing markets of the world. The electric carmaker – on the 18th May – made the big announcement that it was leaving the market of India – the fifth largest in the world by sales. This came as a part of global restructuring exercise.

The dealers of the automaker are upset and are warning of job losses – of over 15,000. Also, there is a potential loss of over thousands of crore, which is mostly from 18,000 GM vehicles that are in stock and will possibly find no buyers now.

Lack of stability in CEOs could be the reason behind GM’s exit

A spokesperson at GM India said in an email response, “Last week’s announcement was a difficult one for GM India and a decision that was not taken lightly at all. It came after a lot of careful considerations and planning and after we assessed many different options.”

General Motors has been a laggard in the Indian market – you cannot ignore the Tavera recall of 2013 where around 114,000 vehicles were recalled over problems related to emissions. The Indian GM dealers are angry because according to them, “they kept giving us false assurances whenever we confronted them on the rumors.”

The final decision was made very recently and until then it proceeded with the previously stated plans, said the GM India spokesperson. She said, “As soon as the business decision was made, we updated all our stakeholders as early as we possibly could.” The decision of the automaker to leave the market was partly due to global compulsions. The market is leaving the South African market as well. The car maker is, however, planning to continue exporting its vehicles from India. GM will maintain its R&D facilities, sourcing and its technical center.

In the last 21 years, GM had nine CEOs with an average tenure of 2.5 years and Maruti is just on its fifth CEO when it is completing its 36th year soon.

 

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