General Motors Dealers Not Happy With Separation Package

On 18th May, 2017, General Motors announced that it will no longer sell cars in India after 31 December, 2017. The first casualties of this announcement were the Chevrolet dealers in India, who will be the worst-hit, once the company ceases operations in India. From what we hear, the Chevy dealers are looking at total losses of around Rs. 1,000 crore. The repercussions do not end here. As a direct result of GM's decision to stop selling cars in India, over 15,000 people will lose their jobs and this does not include 400 people who will be laid off from the company.

The separation package proposed by GM to its dealers is merely Rs. 100 crore and it has been rejected by majority of the 96 dealers in India who operate a total of 140 showrooms across the country. GM is offering only 10 per cent compensation for all the long term investment that the dealers have put in.

(Popular General Motors Cars sold in India)

FADA has drafted a counter-agreement with the help of a legal counsel for the separation package and has sent the same to GM on Saturday, 1 July 2017. FADA is hoping to hear from GM on this, soon. The Dealers body has also approached the PMO and Ministry of Labour and Employment as well.

GM India had allegedly led the GM dealers to believe that it will be expanding its scale of operations in India by launching new models and in good stead; the dealers too had invested in manpower and infrastructure. There was no official communication from the company on the announcement of GM India shutting sales operations in India and focussing only on exports, said the dealers.

(GM will be exporting the Chevrolet Beat Sedan manufactured in India)

GM dealers, who do not accept the separation package proposal by 15th July, 2017 will get only 50 per cent of the amount due to them. The dealers, who do not accept the proposal by 15th September, 2017 stand to lose the compensation entirely. According to a PTI report, GM India says that it is providing a fair and transparent transition assistance package which is based on methodology that is consistent across all dealerships.

It was barely two years ago that the company had announced an investment of $ 1 billion in India with regards to scaling up manufacturing operations and launch 10 locally manufactured model over the next five years, till 2020. Needless to say, it all did not go according to the plan.

While the company will stop selling cars in India, the Chevrolet plant in Talegaon, Maharashtra will continue to manufacture vehicles for exports. The company has already stopped production at its first plant in Halol, Gujarat.