GM EXIT WILL HAVE NO IMPACT
By TA News Bureau:
As part of global restructuring, General Motors India Private Limited (GMIPL) has announced that it is exiting India, which experts say is expected to be the world’s biggest auto market in about four years. Dealers have said about 15,000 job losses are expected. With monthly average sales of less than 900 vehicles, GMIPL has been facing tough competition from Maruti Suzuki, which has a 47 per cent share in the market. Dealers, customers and workers are distraught at the April closure announcement. Global CEO Mary Barra, during a visit to India in July 2015, had announced closing of the company’s Halol facility in Gujarat. It was thought the plant at Talegaon Dabhade, Maharashtra, would continue as she had indicated fresh investments of a billion dollars in India. Now the retail sales and service agreements would expire in December. It was in this context that the well-known automobile industry analyst Abdul Majeed, Partner & Auto Sector Lead of PricewaterhouseCoopers India, spoke to Tyre Asia about the closure impact and India’s automobile market
What is the short and medium-turn impact on India auto and tyre industry following General Motors India’s decision to wind up operations?
I don’t think of any significant impact in short term or medium term on the Indian automobile and tyre industry. Indian market has a huge potential for growth. At PwC Autofacts, we expect that India’s light vehicles assembly volumes will grow to 6.7 million in 2023 compared to 4.1 million 2016. Having said that only those OEMs will grow who have a clear strategy focusing on India market covering product considering customers’ changing preferences, distribution and after sales and services.
What is its impact on government’s plans under ‘Make in India’?
‘Make in India’ is a very good initiative. The Indian automotive industry typically contributes significantly to the manufacturing GDP growth. We need to have a conducive environment for manufacturing such as world-class infrastructure, supportive land and labour laws etc so that the automotive manufacturing can play a vital role in the Indian economy.
Will foreign auto makers become wary to come to India following GM India’s decision?
Foreign OEMs will continue to invest in the Indian automotive Industry considering the potential of the Indian market, and I do not see any significant impact on GM India’s exit.
How will GM India closure hit India becoming a manufacturing hub for vehicles for different segments for exports to the Asia-Pacific region?
I don’t think the GM closure decision will have any significant impact on the Indian automobile sector. However, it is pertinent to note that we need to create a supporting environment for manufacturing such as supportive regulatory regime in the areas of land acquisition and labour coupled with excellent infrastructure so that manufacturing activity will significantly pick up in the country going forward. With the recently introduced Goods and Services Tax or GST, we have now achieved major indirect tax reforms and we now need to work on other areas of reforms.