GM Backs Up From India, Steers Toward Money-Making China

(Beijing) — The road that General Motors Corp. (GM) built in India has proved to be a cul-de-sac, steering the American automaker back toward more profitable markets such as China.

GM announced Thursday plans to halt Indian sales of its Chevrolet vehicles, the company’s only brand in the fast-growing vehicle market, by year’s end. The decision came after two decades in India.

The company said it will continue manufacturing vehicles in India but only for exporting to countries in South and Central America.

The Chevrolet pullout comes on the heels of GM’s decision last year to discontinue production at its Indian plant in Halol, Gujarat, and negotiate a possible sale of the factory to its longtime China partner, Shanghai Automotive Industry Corp.

GM is also in the initial stages of a brand restructuring in China.

Chevrolet’s utilitarian line-up has struggled for years to win a respectable slice of the Indian market. Chevrolet sales fell 21% last year even as India’s passenger car market expanded 10%, according to the Society of Indian Automobile Manufacturers.

Chevrolets currently account for less than 1% of all vehicle sales to Indian consumers.

GM is abandoning India after concluding that investing more money in the country “would not help us achieve a leadership position or compelling long-term profitability in the domestic market,” GM International’s Stefan Jacoby said Thursday.

“Exports will remain our focus going forward as we continue to leverage India’s strong supply base,” said Jacoby.

In China, GM’s ongoing brand restructuring has called for ditching low-end Buick models that the company says compete against Chevrolet vehicles.

Although GM’s high-end Cadillacs are becoming more popular in China, where sales of the luxury brand nearly doubled last year, Chevrolet sales dipped 8% in April compared to the previous month to about 32,000 vehicles.

Chevrolet sales in China outperformed the auto industry in general, however, as the nation’s combined vehicle sales declined 17.8 % month-on-month in April. The market was dragged down by the government’s softening of new-vehicle tax incentives since the beginning of the year.

GM’s moves in India and China are part of the carmaker’s wider international effort to streamline and focus on markets with strong profit opportunities, industry experts said.

“In India, where smaller cars are favored, Chevrolet has less of an edge compared with other competitors,” said Wang Cun, vice president of the Chinese auto retailer Sinomach Automobile Co. Ltd.

“The company is obviously trying to increase sales volume in China, continuously launching new models and simultaneously selling the new and older versions of the same model,” Wang said. “It’s quite aggressively trying to get a larger market share here.”

Contact reporter April Ma (fangjingma@caixin.com)