General Motors holds back $1 bn investment in India

General Motors has put on hold its plans to invest around US $1 billion in India. The US-based automaker will be re-assessing its strategy for the Indian market, and will thus re-evaluate the earlier planned investment. The company will also be conducting a full review of its future product programs in India.

This investment hold comes as an aftermath of GM India's continuously falling sales numbers. The company now has less than 1% share in the domestic passenger car market. Moreover, the recent inclination of Indian customers towards petrol powered cars, and the regulatory crackdown on diesel vehicles has forced the automaker to revise its strategy for the country.

Talking about this investment hold-back, Jack Uppal, vice president, marketing at GM India, commented that the earlier announced $1 billion investment was committed on a certain product program plan. The changing market requirements have forced the company to re-think its potential launches for the Indian market. And with this product program change, the investment too would need to be revised. As a result, the automaker would be evaluating their next step in the market. Till then, all investments in the country have been put on hold. Moreover, sources suggest that General Motors is also re-thinking its strategy to use India only as an export hub.

The company had earlier announced their plans to develop a Global Emerging Market (GEM) platform, which will be used to build low cost cars for the emerging markets like India, China and Brazil. This platform too has been put on hold for India, while it will be introduced in other markets as per schedule.

GM India had recently revealed that they would shelve plans to launch the Spin MPV in India. Jack Uppal has now clarified that GM will still launch two small cars in the Indian market, the Beat Activ hatch and the Essentia compact sedan. Both these cars will be introduced next year.

Source: Reuters