Chrevrolet to pull out of India, South Africa

Posted May 19, 2017

In doing so, it has withdrawn from a race with Toyota Motor, Volkswagen and the Renault-Nissan alliance for the industry's coveted sales crown.

India is not the only market in which the American auto giant is consolidating its operations. Given the low sales, it's not hard to see why the company chose to exit the markets and save around $100 million annually.

The move is the latest blow to Prime Minister Narendra Modi's "Make in India initiative", aimed at making the country a global manufacturing powerhouse. It is selling a plant in South Africa to Isuzu Motors. The decision to withdraw their operations comes after a consistent failure to hike up their sales in the Indian market. About 200 people work in that operation, the company said.

The company claims that the reasons for this decision was the financial losses due to its India sales and that any plans to increase investment in the country would not give them returns in terms of leadership position or a significant rise in market share.

"In India, our exports have tripled over the past year, and this will remain our focus going forward", Stefan Jacoby, GM executive vice-president and head of GM International, said. Isuzu will also purchase GM's Vehicle Conversion and Distribution Centre and assume control of the Parts Distribution Centre.

GM has been working to shore up losses in many countries included in its worldwide operations division.

One could argue that India is a fiercely competitive market for automakers and the price-sensitivity here doesn't leave much room for brand loyalty among consumers. Years later, in 1995, it returned to India via an equal joint venture with Hindustan Motors and sold cars under Opel brand.

The Detroit automaker said on Thursday it will take a $500 million charge in the second quarter to restructure operations in India, Africa and Singapore.

GM said the actions will save it $100 million annually. This project will help design, develop and market low-priced cars for the Indian and other relative markets. Two years ago, GM said it would invest $1 billion in India to produce 10 new Chevy vehicles over five years. GM sells more cars in the U.S.in less than half a typical workweek. Taking leverage of India's strong supply base, the new Chevrolet Beat will be exported to Mexico and Central and South American markets followed by a Beat sedan later this year for those markets.

Production at the plant reached around 31 000 units previous year, down from 41 209 in 2015. It will continue to operate a design and engineering center in Bangalore. But its market share fell to below 1 percent in the year ended March 31 from 1.17 percent the previous year - even as India's market grew 9 percent to climb above the 3 million vehicle level.