Exclusive: GM close to India exit as 99% of union workers accept VRS settlement

US carmaker General Motors is finally at the last leg of closing its local operations in India, after almost 39 months of a protracted standoff with workers and local authorities of the Maharashtra state government. 

Having received a favourable verdict from the Bombay High Court for its closure application in January, the protesting General Motors Employees Union had softened their stand against the company - deciding to drop all legal cases against the US carmaker.

After winning the verdict in January 2024 from the court, the Maharashtra State Labour Commissioner had initiated the closure process in February 2024. Following that, the company had re-opened the VRS scheme of payout of 110 days.

Autocar Professional learns that the US carmaker has settled almost 99% of the 880 protesting workers’ VRS requirements – which may have led to a cash outgo of about Rs 100 crore to Rs 125 crore by 29 March.

“Despite General Motors winning the case at Bombay High Court, it decided to go ahead with the compensation settlement. Just a handful of workers are yet to receive their compensation as they were out of town, but in principle, all of them will receive their settlement and the legal operation has finally come to a close,” said a source close to the development.

In an official response, the General Motors India spokesperson told Autocar Professional that following the court's decision in favour of GM's factory closure, the company reiterates its unwavering commitment to the welfare of its employees.

“As a demonstration of this commitment, GM has extended the remainder of the original separation package as part of the settlement. We are pleased to announce the amicable resolution of all outstanding labour matters. We thank our employees for their contributions over the years and wish them success in their future endeavours,” the spokesperson added.

While the company had rolled out its last car from its manufacturing line at Talegaon, Maharashtra in December 2020, it was not able to go ahead with the closure due to workers unrest, who wanted the job continuity with the new owners.  

The US carmaker had entered a Memorandum of Understanding with the Chinese carmaker Great Wall Motor for sale of its factory pre-covid, but the unfavourable geo-political situation had led to the deal falling through.  

Later the company managed to sell the plant to South Korean car maker Hyundai Motor India - but the workers kept their fight on with the General Motors India management – even pulling the global CEO – Mary Barra as a party to the case over the last few years.  

In its presence of over a couple of decades, the company had incurred a cumulative loss of over $1.5 billion in the country and hence had decided to pull the plug on the operation.

General Motors in a company statement acknowledged “the professionalism exhibited by the government of Maharashtra throughout this process.”

While the acquisition for Hyundai comes clean without any workers' liability, the state government is likely to request the South Korean car maker to absorb as many workers from the GM India factory as possible, to ensure their livelihoods are protected.

Hyundai Motor India has committed Rs 7000 crore investment at the Talegaon facility, which will help the company take its cumulative capacity close to 1 million units along with its Sriperumbudur facility on the outskirts of Tamil Nadu.

Sources say the South Korean car maker is likely to produce its new-gen Venue codenamed QU2I from its Talegaon plant. The start of production from Hyundai is scheduled for around October, 2025.

The current facility has a capacity of about 1.3 lakh units, but it is likely to be scaled up to 2.5 lakh units eventually. The plant is likely to generate employment of several thousand workers.