General Motors is leaving SA

GM to stop selling cars in India but not pulling out

Employees work on a Chevrolet Beat auto on an assembly line at the General Motors plant in Talegaon, about 118 km (73 miles) from Mumbai September 3, 2012.

American multinational corporation, General Motors India on Thursday announced that it will stop selling cars in India from the end of this year.

The move will however see Isuzu stepping up to the plate, purchasing GM's light commercial vehicle manufacturing facilities in Port Elizabeth.

Existing Chevrolet customers will continue to be supported in the market, the company said.

However, GM will continue to produce cars at its Talegaon factory in Maharashtra for exports.

On its part, General Motors has cancelled the launch of the new Chevrolet Beat, and sales of all Chevrolet cars will be stopped at the end of the current calendar year. GM India President and Managing Director Kaher Kazem said at a conference call that the development will impact 400 employees associated with sales and after sales service.

A second plant in the western state of Gujarat, where GM ceased manufacturing last month, will likely be sold to its Chinese partner SAIC Motor, which is bidding to enter the crowded but promising Indian market.

While it is too early to say, if GM were to consider a return to the Indian market, having a fully functioning manufacturing plant and a healthy local component supply chain will definitely help.

GM's exports from India, mainly to Mexico and Latin America, almost doubled to 70,969 vehicles in the fiscal year than ended on March 31.

After two decades in the Indian market, GM has little to show in terms of sales and market share.

General Motors said the move was prompted by last year's 21 percent drop in sales when the company sold 25,823 vehicles.

Under the programme, GM planned to build a new line of low-priced cars for markets such as India and China. This announcement is a part of GM's global disciplined allocation of capital and investment in its businesses around the world in order to generate stronger returns and drive shareholder value. GM India exports to Mexico, Central and South America. $838 million in 2016.

GM India started its Indian journey in 1996 and now offers products under the Chevrolet brand in the country.

In 2013, GM India recalled 1.14 lakh units of its multi-utility vehicle Tavera in one of the largest vehicles recalls in India to address emissions and specification issues. It is also being reported that the American carmaker is in talks with Mahindra for forging a service agreement where the latter will be responsible for providing service to GM vehicles during the next couple of years.

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