The world’s largest automaker, General Motors will pull the plug on making cars for the Indian market in India by the end of 2017
“Today’s GM management is correctly focused on profits, not sales volume and market share. It has shown a willingness to cut its losses if there’s no clear path to profitability and market dominance.” said Michelle Krebs, executive analyst for Autotrader.
Detroit, United States (Mckoy’s News) – General Motors (GM) on Thursday, May 18, 2017 announced its plan to stop selling vehicles in the once promising India. However, it would continue to provide maintenance services to GM vehicles in India. It also said that its plant in Maharashtra, India would continue to make cars for overseas export markets, mainly central and south American regions. GM’s announcement comes against the backdrop of predictions that India will become the world’s third biggest vehicle market by 2020.
GM announced similar plans for South and East African markets as part of its global business restructuring. The automaker says its retreat from these parts of the world where its profits are slow, is so that it can focus on profitable regions. GM is moving its focus to more financial resources in parts of the world where it’s more profitable, especially North America and China.
“As the industry continues to change, we are transforming our business, establishing GM as a more focused and disciplined company,” GM CEO Mary Barra said in a statement. “We are committed to deploying capital to higher return initiatives that will enable us to lead in our core business and in the future of personal mobility.”
In addition, the Detroit, US car-maker said it would stop selling cars to South Africa and sell its manufacturing business there to Isuzu Motors. It added that Isuzu would also purchase close to 60% shareholdings in its East Africa operations, assuming management control. The firm is aiming to make significant savings through these initiatives.
With these new initiatives, GM expects to realize annual savings of approximately US$100M and plans to take a charge of approximately US$500M in the second quarter of 2017.
This new decision from GM’s comes on the heals of similar decisions made by the world’s largest car-maker in 2015 and 2016. Where the company sold its European division to French automaker PSA Groupe, and discontinued sales of mainstream Chevrolet models in Europe in 2015, exiting Russia in 2015 and end manufacturing in Australia in 2016.
