India to get a fifth of GM’s $5 billion investment for growth markets

Chevrolet has announced today  that it will invest US$ 1 billion (Rs 6,400 crore) in India to revive its business that has been flailing with frequent vehicle recalls and losses. The investment will be made at its Talegaon plant, near Pune, and create 12,000 jobs for General Motors India (GMI) and for its suppliers, while the Halol plant in Gujarat which has a manpower of 1,100 will be shut down by the second half of 2016 to rationalise its domestic production. The company has invested $ 1 billion in India since 1996.

The new investment in India will form part of the $5 billion (Rs 31,585 crore) investment it had announced a day earlier to strengthen its business in global growth markets through the development of an all-new vehicle family aimed at meeting the rapidly changing demands of customers in India, Brazil, China and Mexico.

The new vehicle family is being developed by a multinational team of engineers and designers assigned to ensure each entry is tailored to meet the expectations of customers in each market. A high level of localisation of parts suppliers should drive significant savings over the life of the programme. The programme is expected to grow to more than 2 million vehicles annually with the first entry planned for the 2019 model year.

GM India will launch 10 new models in India across the next five years, beginning with the Trailblazer SUV in October 2015 and the Spin MPV in early 2017. The third model will be the new Beat that will roll out in notchback and hatchback variants.

The announcement was made in New Delhi during GM CEO Mary Barra’s second visit to the country in 12 months. Barra, along with GM executive vice-president and GM International president Stefan Jacoby and GM India president and MD Arvind Saxena, met India’s prime minister Narendra Modi to brief him on Chevrolet’s India plans and the company’s long-term commitment in India.

 “Chevrolet is committed to India for the long term. We are delivering on our promise and doubling our investment in India. This will allow us to provide our Indian customers the great vehicles they want and the world-class customer experience they deserve. It will also support the government’s Make in India programme,” said Barra.

By creating an all-new vehicle family to replace several existing vehicles, Chevrolet expects to substantially improve competitiveness and profitability by delivering what customers expect in each market while taking maximum advantage of the benefits of global scale.

Also, Chevrolet will have completely new products by 2020 in India and dealerships will not have any vehicles older than three years.

Besides growing the use of the domestic supply base to support increased product localisation, Chevrolet will also grow its domestic dealer network to support the greater availability of vehicles and services for consumers nationwide.

The majority of the new investment will support the strengthening of Chevrolet’s Talegaon manufacturing base in Maharashtra. It will enable the facility to localise, industrialise and optimise its footprint to accommodate additional products for the domestic and export markets.

Talegaon, which has a production capacity of 130,000 vehicles, will increase its base capacity to 220,000 vehicles by 2025. It will also become a global export hub for GM with more than 30 percent of its annual production planned for markets outside India.

“The new global family we just announced will have several different body styles designed to meet the expectations of the Indian consumer. The vehicles will be manufactured and sold in India and feature striking styling that has never been seen here before. They will also be exported worldwide. With this investment, our aim is to double our market share in India by 2020,” said Jacoby.

This new vehicle family will feature advanced customer-facing technologies focused on connectivity, safety and fuel efficiency delivered at a compelling value.

However, there are no plans to export the vehicles to mature markets such as the United States.

Meanwhile Chevrolet says it has communicated directly with employees at the Halol facility and they will be given the option of joining the Talegaon plant.  Halol is GM’s first plant in India set up in 1996 followed by its Talegaon facility in 2008.

“Consolidating our manufacturing in a single location in India will support the long-term sustainability of our business in a challenging emerging market,” added Saxena. “This is not a decision that we are making lightly and we are committed to treating those impacted respectfully,” he added.

GM also runs the GM Technical Centre – India in Bangalore since 2003. In India, in 2014-15, it sold 51,839 vehicles, down 35.91% YoY) and has a market share of 1.9 percent in the passenger vehicle market. 

GM says it has further expanded its successful partnership with SAIC Motor through an agreement to jointly develop the vehicle family core architecture and engine, which it expects will result in significant development cost savings and optimised total vehicle cost.

Photograph courtesy: Press Information Bureau