General Motors Co will stop selling cars in India from the end of this year, drawing a line under two decades of battling in one of the world's most competitive markets where it has less than a one per cent share of passenger car sales.
The decision was announced as part of a series of restructuring actions from the Detroit automaker on Thursday May 18,2017, and marks a significant blow to India's strategy of encouraging domestic manufacturing.
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 Gujarat 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.
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.