One of the first automobile OEMs to enter Gujarat, GM India is expanding its Halolplant from where it now also rolls out the Chevrolet Enjoy MPV. A report by Shobha Mathur.

For US carmaker General Motors, its tryst with Gujarat began way back in the mid-’90s, when exploring a long-term avenue into India, it signed a 50:50 joint venture with Hindustan Motors (HM), the manufacturer of the iconic Ambassador, to sell Opel Astra cars in India.

HM, at the time had a manufacturing set-up at Halol in Gujarat where it produced 3- to 5-tonne Isuzu trucks since the1980s and had been an established player in the country, hence a potential partner. Usually, multinational players who want to enter India have always started their innings by entering into a technical collaboration or leveraging a tie-up with a local partner to draw on their partners’ experience and distribution network to crack the domestic market. Once they have grasped the challenges of the local landscape, they outgrow their partnerships and strike out on their own.

A couple of examples include Ford Motor Co which had its Escort saloon beginnings with Mahindra & Mahindra and Japanese two-wheeler manufacturer Honda Motorcycle & Scooter that began its India story with a JV with Hero.

So the oft-repeated story played out once again in the case of General Motors. In 1999, GM bought out HM’s stake, making it a 100 percent Indian subsidiary. Thereafter, the Halol plant was refurbished and capacity expanded to cater to GM India’s requirements in terms of future products. Initially, GM India (GMI) continued to produce Opel cars at the Halol facility until 2003, when it started producing vehicles under the Chevrolet brand as well. Thereby, GMI became the first vehicle manufacturer to have full-fledged operations for manufacturing cars in the state with Tata Motors following much later with its mega small car project – the Tata Nano, in 2008.

Role of the Halol plant

“Halol is our mother plant and will play a vital role in our Indian operations. The usage of the plant will depend upon the models which we plan to introduce to this market in the years to come. We have a flexible plant at Halol and will work out the options depending upon requirements,” says P Balendran, vice-president and spokeperson, GMI, about the importance of Halol in GM's overall gameplan.

The recently launched Chevrolet Enjoy MPV along with the BS IV Chevrolet Tavera MUV and Chevrolet Cruze saloon are currently produced at the Halol plant. Spread over 172 acres, it has an annual capacity of 85,000 units and is implementing an expansion programme that will gear it up for an annual capacity of 110,000 units. It also has a manpower strength of 2,000, out of the carmaker's total workforce of 4,500 directly involved in its India operations.

Over the years, GMI has shifted its corporate office to Gurgaon and opened its technical centre at Bangalore. Here, the US giant undertakes its R&D and vehicle engineering activities spawning vehicle engine and transmission design as well as vehicle design activities. The tech centre also houses GMI's design studio. As part of its growth trajectory in India, GMI then set up its second vehicle assembly facility but this time at Talegaon in Maharashtra. This facility also includes a flexi-engine assembly line that can roll out diesel and petrol engines

The Talegaon plant began production in September 2008 and produces the Chevrolet Spark, Beat, Sail and Sail UVA models, the latter two being the Chinese-designed passenger cars. GM’s first powertrain facility has a manufacturing capacity of 160,000 units of diesel and petrol engines. Besides, Talegaon has a vehicle assembly capacity of 140,000 units per annum.

Expansion planned Both the Halol and Talegaon engine and car manufacturing plants have been planned with future expansion in mind. So far, GMI has invested over Rs 5,000 crore in its India operations with Halol accounting for Rs 1,800 crore. As future products from the GM-Shanghai Automotive Industry Corporation of China stable roll out, GMI is expected to loosen its purse strings further. The Sail platform was the first of the GM-SAIC products followed by the MPV Enjoy.

During the second phase of expansion at Talegaon, capacity will be stepped by an additional 160,000 cars and 140,000 engines that will take the total capacity at the Maharashtra plant to 300,000 cars and 3,00,000 engines per annum, based on market dynamics.

Vendor development
While GMI was the first entrant in Gujarat, it now finds itself in a veritable cluster with the likes of Ford India, Maruti Suzuki, HeroMotoCorp as well as others in various stages of starting operations. Following the OEs are their vendors who have set up units in the supplier parks. "It is a good development as it attracts a lot of component manufacturers as well to the state," says Balendran on the influx of new OEMs into the state "The business climate in Gujarat has been described as investor-friendly and therefore it should turn out to be a win-win situation for both the manufacturers and the state. In terms of infrastructure, Gujarat has made a mark for itself. This, combined with the state's investor-friendly policies, may well attract more players to Gujarat going forward," he adds.

Both the Halol and Talegaon plants together have created enough capacity to cater to market requirements and new models in the pipeline will utilise this capacity. General Motors is further strengthening its India base by outsourcing components from the country for its global operations with plans to source parts worth $1 billion in the next two years.

Though General Motors India witnessed one of its longstanding labour problems at Halol, getting skilled workforce is not one of the issues in the region as the company has tie- ups with ITIs and other engineering institutions in Gujarat. Neither is the carmaker feeling threatened by the development of Sanand and Becharaji in the state as other carmakers troop in, says Balendran.

Halol is an industrial area and industry here has received government support with the necessary infrastructure in place to keep the state's flag flying high.

According to SIAM data, General Motors India ranked sixth amongst OEMs in India with a market share of 3.28 percent in the passenger vehicle (PV) segment in FY’13. Its domestic sales stood at 88,150 units, down by 19.90 percent over the previous fiscal. But now as the auto sector slowly blossoms in Gujarat, the long-time local player stands to reap the benefits of this development if it plays its cards well.

Photograph: The first Chevrolet Enjoy rolls out from the Halol plant. It is Chevrolet’s first offering in the MPV segment in India and is available with both petrol and diesel engines. In May 2013, its first month in the market, it sold 2,177 units.