General Motors India made a shocking announcement on May 18 that it will stop selling cars in India from the end of this year. GM decided to exit from the Indian market as part of its global restructuring process. Because of this surprise announcement, more than 150 GM dealers in the market are at distraught and agony with the fear of more than 10,000 job losses. Also, it might be really difficult for the GM dealers in India to find potential buyers for more than 18,000 cars that are currently in stock which could result in losses of thousands of crore rupees.
The customers are also equally worried by this surprise notice of GM’s exit as they are concerned about the service and resale value of their cars. For example, Tanveer Alam, a businessman based out of Indore is concerned about the resale value of his recently bought Chevrolet Cruze automatic car, which is a premium sedan for which he paid Rs. 17.5 lakhs just a month ago. On 19 May, GM dealers received an email about the Transition Assistance Programme to prepare them for the expiration of retailer sales and service agreement on 31 December 2017. All the dealers were also forced to sign an NDA before coming for the F2F discussion. The dealers have sought the help of Federation of Automobiles Dealers Association (FADA) in getting a fair settlement from GM.
On 28th April, GM came with an announcement of new generation Beat, a small car which has been selling well in India. They had forwarded a brochure to all the dealers which state “This July, be ready for the Mobility revolution with the New Beat MCM from Chevrolet”. The rumours about the possibility of an exit from Indian market had started circulating from the 1st week of May. But the dealers ignored them since this wasn’t the first time that such rumours had surfaced and GM has always denied them. When the official announcement came from GM on May 18, the dealers were thrown back with surprise.
General Motors Chief Executive Officer Mary Barra stated that this decision was made to help the company focus on core profitability and allow it to invest in new technologies such as electric and driverless cars that can boost its financial health. She said, “Globally, we are now in the right markets to drive profitability, strengthen our business performance and capitalise on growth opportunities for the long term”. She also added that GM will phase out its Chevrolet brand from India by this year-end after which its Talegaon manufacturing plant will focus on production for exports to Latin America.
General Motors started its Indian operations during 1994 and its market share in India is just 1 percent. With average monthly sales of less than 900 vehicles in India, GM has been a laggard when compared to other players like Hyundai, Ford and Maruthi Suzuki. After all, it might not be such a good call to exit one of the fastest growing auto markets with a bad note, just for the sake of profit margins.
