GM says it would no longer market its Chevrolet brand - its only brand of cars marketed in India - despite India's promise as a market set to overtake Japan as the world's third largest in the next decade.
But it doesn't plan to leave India entirely.
It plans to keep operating its tech center in Bangalore and to refocus its India manufacturing operations by making one of its two assembly plants in India – the one at Talegaon, about 100 km (62 miles) southeast of Mumbai – into an export-only factory. It plans to sell the Halol plant in the western Gujarat state to Chinese joint venture partner SAIC Motor Corp .
"We are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base which is extremely competitive," Stefan Jacoby, GM's chief of international operations, said in an interview.
GM's exports from India, mainly to Mexico and Latin America, nearly doubled to 70,969 vehicles in the fiscal year than ended on March 31. The Talegaon plant has a capacity of 130,000 vehicles a year.
Jacoby said the move to turn the Talegaon assembly into an export-only plant will not impact GM Korea and its position as an export hub. India will export vehicles mostly to Mexico and South America, among other destinations, while GM Korea will ship Korean-made cars to North America, Southeast Asia, Australia and Pakistan.
Dan Ammann, GM’s global president, said the restructuring actions for India announced on Thursday in essence cancels "most" of the plan GM unveiled in 2015 to invest $1 billion in India to deploy newly-designed vehicle architecture as part of a Global Emerging Market vehicle programme or GEM for short, and build a new line of low-cost vehicles in India.
The decisions to significantly scale down GM's operations in India are results of months of analysis over "where we are going to place our bets (globally) as a company," Ammann said in an interview.
The move is the latest blow to Prime Minister Narendra Modi's "Make in India initiative," aimed at making the country a global manufacturing powerhouse.
Last year, Ford Motor Co shelved plans to produce a new compact car family designed mainly for emerging markets. India and China had been slated to be the main manufacturing hubs for the new range that was set to begin production in 2018.
The auto sector is a major employment generator accounting for about 29 million direct and indirect jobs in India. Moreover, the $93 billion industry contributes 7.1 percent to the nation's gross domestic product and almost 50 percent of India's manufacturing output.
Ammann said GM looked at many options but determined that the investment originally planned for India would not deliver the kind of return other global opportunities offered.
