General Motors’ general failure
General Motors was one of the first foreign carmakers to enter India after the Government had eased entry conditions for manufacturers. Those were heady times for Indian automotive writers; as after a decade of unprecedented success, Maruti-Suzuki’s bastion was under attack. And General Motors, the world’s largest car manufacturer was one of the first to enter the market alongside its rival from Detroit, Ford and South Korea’s Daewoo.
General Motors first car in India was the Opel Astra, Opel was a storied German brand, and while some at the time questioned why General Motors had brought a relatively unknown brand to India instead of their British marque Vauxhall or any of their well-known American brands Chevrolet, Buick and Oldsmobile, General Motors executives at the time argued that this was because Indians valued German brands higher than America.
While this was odd, because General Motors had gone the American brand route in China from the get-go, the Buick badge quickly becoming a very popular in the Chinese market. While India was still a small market, General Motors had also decided to go down a route that possibly forecast their lack of sales success. By launching the Opel Astra, which by all accounts was an excellent vehicle with good driving characteristics and an extremely comfortable one too, they went down a route of luxury. Keep in mind, this was 1997 and the seven to eight lakh rupee Astra was a pretty penny. Of course, sales were limited and even though GM followed up a few years later with the Opel Corsa, a smaller sedan which was also launched as a hatchback and an Estate version, it always was playing catch-up in the Indian market.
General Motors lack of success can be simply attributed to not having an appropriate vehicle for the Indian market. Of the other early starters in India, Ford quickly worked towards the Ikon, although they did wait almost a decade before bringing a small car. Daewoo failed not so much because of their products, indeed the Cielo sedan and Matiz small car did fairly well on the market, but failed as the Daewoo chaebol collapsed mired in a corruption scandal.
And then there was Hyundai, which back in 1997 was an almost unknown carmaker, but they launched with the right product and remain one of the most visible examples of superstar endorsement working thanks to Shah Rukh Khan. It was Hyundai that made Maruti-Suzuki change tack, the Government exited the carmaker by 2001 and Maruti management started to become more competitive. Far from being outsmarted by its new rivals, Maruti-Suzuki management has achieved an incredible feat of retaining almost half the market in one of the world’s largest automotive markets. And General Motors is packing up their sales division.
Sure, while General Motors Talegaon plant will continue to make cars for ‘export’, it is more than likely that this relatively new car factory, less than a decade old on the outskirts of Pune will be sold to another carmaker. After all, a ready-made 300,000 unit a year plant would take at least 12-18 months to put up otherwise. General Motors exports from India have not hit the heady heights of those from Renault-Nissan’s plant in Chennai and lack the ambition of Ford which plans to sell a ‘Made In India’ EcoSport in the United States.
But the allegation can also be made that GM didn’t really try hard enough in India. General Motors India sales peaked in 2010 and 2011, they had a 4.18 per cent marketshare in 2010 when they sold 110 thousand vehicles. This was when the Tavera UV was in peak production and the Spark and Beat small cars still had some buyers. But with updates to their lineup limited, as the carmaker struggled with bankruptcy and bailout issues back in their home market, even though the new Chief Executive Mary Barra seemed to believe in the Indian market. She made three visits to India in rapid succession in 2014 and 2015. Around the same time, new of a pollution scandal emerged from earlier as GM was found to have broken pollution norms by swindling inspectors, although, possibly thanks to GM’s poor sales position in India, this did not make the headlines as it should have.
The Enjoy Utility vehicle and both the hatchback and sedan variants of the Sail pretty much sank without a trace and sales fell off a cliff. From around 87,000 units in 2013 to 29,000 units in 2016. Just for the sake of comparison, Maruti alone sold close to 28,000 units of its basic Alto 800 in September 2016 alone. Even though the Beat had some limited sales success and General Motors even developed a small diesel engine for the car, their products were simply not exciting enough and the Chevrolet brand was weak. General Motors cars, from the Opel era onwards had poor residual value. And most importantly, this was happening at a time when companies like Maruti, Hyundai and Ford were developing new segments.
The story of Renault in India is a good contrast to what happened to General Motors. Despite a stormy relationship with Mahindra in their joint-venture which Renault exited, a ridiculous partnership with Bajaj Auto to develop a small car and products like the Fluence which hardly sold and a couple of rebadged Nissans. Yet, enault learnt from their mistakes, brought in the Dacia Duster, rebadged it into a Renault and as the French say, voila! The success of the Duster allowed Renault to develop the Kwid small car which Renault’s Chief Executive Carlos Ghosn says has helped the French company make money in India.
General Motors has decided to cut its losses and run from selling cars in India, while the sale of the factory is pure speculation for the time being, but it is a highly likely possibility. The engineering facilities in Bengaluru that work on the onboard computing systems will likely continue. Is this the right decision for them to make? Well, in March General Motors sold their European brands Opel and Vauxhall to Peugeot which proves that Barra’s aim of remaking the company has no space for sentimentality. General Motors is longer the world’s top car company, far behind both Volkswagen and Toyota, and while sales in China have held up, GM is desperately trying to reposition itself in the ‘new’ automotive market where electric and hybrid cars will rule.
General Motors decision to leave India should not however be seen as an indictment of the Indian car market, the past decade has been one of immense growth. This is first and foremost a failure of management from product management and marketing. If GM had left India when they were virtually down and out in 2008, the decision would have hurt some people less than the one made today. Maybe one day GM will come back to India, but for now, we bid Motown’s giant Goodbye.
- ‘GST to add 40 bps to growth rate; won’t stoke inflation’ 25 May 2017 | PTI
- Mahindra Electric bets big on e-vehicles; to ramp up output 25 May 2017 | PTI
- India, Japan JV to set up LNG import terminal in Sri Lanka 25 May 2017 | PTI
- ‘B’luru prime destination for IoT startups in India’ 25 May 2017 | PTI
- Videocon shares see massive sell-off; drop 42% in 3 days 25 May 2017 | PTI
- MSI plans to upgrade engines, more models with automatic variants 25 May 2017 | PTI
- HCL Tech to buyback stock at 17% premium for Rs 3,500 crore 25 May 2017 | PTI
- ‘ADD on steel items to create stable environment’ 25 May 2017 | Manoj Raghuvanshi
- Note ban ‘successful political coup’: French economist Sorman 25 May 2017 | PTI
- Sikka’s salary drops 67% in FY17, total payout down 7% 25 May 2017 | PTI
Sunday EditionView All
21 May 2017 | PTI | Jamshedpur
Protest against lynching of four persons intensified today and the police had to fire in the air to disperse a mob, while prohibitory orders under Section 144 were imposed in four areas here for tonight. Police fired in the air to disperse a mob that blocked roads in Mango area, demanding arrest of culprits involved in the lynching of four persons of a community at Rajnagar in Seraikela-Kharswan district on Thursday...
STATE EDITIONSView All
25 May 2017 | Staff Reporter | Naya Raipur
There will be 14 minor bridges constructed including a major bridge on the proposed railway track between Mandirhasaud, Naya Raipur and Kendri in the new capital region, officials informed. Notably, Naya Raipur has emerged in the country with the largest land bank of a mammoth 237 square kilometres ( 23,700 hectares), officials stated...