General Motors to Expand India Production

Anthony Fontanelle
April 18, 2007

Automakers are continually looking for emerging markets to increase their sales globally. One such country on the verge of becoming a huge auto market in the near future is India.

This Asian country has attracted the attention of major car manufacturers to invest in the country. Different car companies have already entered into partnerships with Indian car manufacturers. Renault is one of these car manufacturers by virtue of their collaboration with Mahindra & Mahindra Ltd. which has resulted to the production of the Logan sedan in India.

Aside from Renault, another global car manufacturer, in fact the largest car manufacturer in the world, has expressed their plans to increase their presence in the Indian automobile market.

On Tuesday, April 17, General Motors’ Chief Executive Officer Rick Wagoner announced that the company will be buying more auto parts from India. Wagoner also stressed that they are aiming to increase their share on the Indian auto market over the next few years. By the year 2010, General Motors aims to corner ten percent of India’s growing auto market.

As far as buying parts from India is concerned, the company expects an increase of at least five times compared to current sourcing figures. This five-fold increase is expected to take place within the next couple of years.

Wagoner recently visited India, and at a press conference there, he has this to say: “We are not only focusing on leveraging our supply base to suit our local needs, we are also looking to source more parts out of India to supply our global operations.” He was there to launch the mini Chevrolet Spark which is General Motors’s entry to the minicar market in India which is experiencing a boost in recent memory.

At the press conference, Wagoner said that he expects India to become the second fastest-growing auto market in the world over the next decade. “Half of the population is under 25 years, so there’s a lot of potential buyers for everything,” says the CEO of General Motors. Wagoner’s expectation is backed by auto experts who have predicted that annual passenger car sales in India will increase to 2 million units per year by the year 2010. Reasons cited for this projected increase are increased income and new vehicles that will be offered by car manufacturers in the Indian auto market.

Currently, General Motors operates an assembly plant at India’s Gujarat state. The said facility produces the Corsa, Optra, Aveo, and Tavera vehicle models which is marketed under the Chevrolet brand. The annual production capacity of the Gujarat facility is 85,000 units. To support their projected expansion in the country, General Motors will be putting up another assembly plant in Talegaon in Western Maharashtra state. The said facility will have an initial annual production capacity of 140,000 units.

Aside from that assembly facility, there are also speculations that General Motors will also put up an engine and transmission assembly plant in India over the next few years.

“With India growing its domestic industry, it is going to increase the possibility of India exporting more,” says Wagoner. These planned and speculated expansions for General Motors in India may signal the rise of a huge exporter of automobiles. Although the country can serve as their production facility for vehicles to be exported to other countries, Wagoner stressed that there are problems if the company takes that decision. “I don’t rule out that products may be shipped to other centers, but there are exchange rate risks, and you can get different types of trade issues,” Wagoner said.

The Chevrolet Spark, a rebadged Daewoo Matiz, is General Motors’ seemingly late entry to the minicar market in India. The company expects the demand for the minicar to increase since the vehicle offers good performance and a long list of safety features. The Spark can also be complemented by aftermarket brake parts such as those found at active brakes direct.

General Motors announced that they will be producing 2,000 to 3,000 Sparks per month until such time that the planned assembly plant becomes operational. When that time comes, General Motors is expected to increase production depending on the acceptance of Indian car buyers of the Chevrolet Spark.

Source:  Amazines.com