Chevrolet is well established in India but could GM have moved faster in setting up a plant to produce a volume model like the M-car (Spark)?
We spent a lot of time acquiring the Daewoo assets, which ultimately didn't happen for various sundry reasons. I think it is fair to say that we lost about two years, so now we are working hard and trying to catch up. We do need a product portfolio and we understand what we want to do in the Indian market and then we need manufacturing capacity to support that.
Capacity in the existing Halol plant is being expanded to 85,000 units a year but that’s too much for your existing portfolio. Will there be substantial capacity left over for the M-car, which will also be produced there?
The initial plan was not to use any of the 85,000 units at Halol to make mini-cars. We wanted to use that capacity to make other products but now because it’s the fastest way, that’s probably what we are going to end up doing. Although we understand that the mini-car (Chevrolet Spark) is the right next product, it is not the last one and also probably not the product that the Chevrolet brand will most effectively build upon. Our aspiration is not to be the largest mini-car producer in India, we want to be the one with the broadest portfolio.
When GM took over Daewoo, Nick Reilly said there was a 20 percent cost advantage with GMDAT. Is is still there?
We certainly have a big advantage with the cost saving from GMDAT. There is cost saving in a couple of ways. Daewoo has relatively low-cost platforms and since the company had gone through some difficult times, it had developed a very cost-efficient supplier footprint in Korea and knew how to do a lot of good engineering to keep the costs down of a car. And those advantages still exist today.
GM has been weak with diesel engines, which your passenger car range desperately needs. Will GMDAT develop diesels?
The GMDAT diesel is a 2-litre and 2.5 unit but for our smaller cars we will be leveraging the diesel technology that came out of the joint venture with Fiat. That’s cutting-edge technology but there’s a timing issue. Since the engine hasn’t been engineered for a GMDAT platform, the validation will take time.
Won’t the Fiat diesel be costlier than an engine developed by GMDAT?
One of the great things about being a global company is that you have a wide cost footprint which allows you to make engines at a competitive cost. Suzuki and others are leveraging the same engine platform in India and this gives us the opportunity to look at components from the same suppliers to our advantage.
China and India are two big markets for GM. Is there a strategy to focus on larger cars for China and smaller models for India?
There’s no strategy like that at this point in time. But I think it would be better for everybody if we can develop a sort of equation between India and China. However, there are a lot of constraints and requirements for localisation in both the markets, to do that. No doubt there is a lot of product sharing opportunity from a design and engineering standpoint as well as a component-sourcing strategy. But, right now the current levels of margins available force a lot of localisation in both markets and in China it requires a high localisation of high-value components as well. It could be a dynamite of a combination if some sort of level of trade understanding existed between the two countries; one that could take these two huge growth engines and volume potentials and leverage that volume through your product portfolio. I think you could see some very interesting things, like products developed specifically for these markets using indigenous skill sets which could then be exported around the world.
Given your plan to develop a car specifically for India, could your tech centre in Bangalore play a more active role in developing future platforms and models?
Certainly. Here's how I look at it: there are estimates that 50-70 percent of the growth in the auto industry in the next 20 years is going to take place in Asia. So we will see a shift of vehicle development to these areas. You can't just take North American and European platforms and modify them for Asia. We tried that and it did not work very well. An Asian-developed platform just sort of sticks and Daewoo has demonstrated this very well. Asian products developed by Asians are a natural fit and I believe it is one of the keys to success in this market. We have a number of development centres in Asia and of course there’s Daewoo which we can leverage. We have some very enthusiastic and young people in Bangalore and we need to keep cranking them through more lifecycles and give them bigger and bigger pieces of the vehicle to develop.