GM’s Gujarat plant sale edges closer to fruition

The acquisition of General Motor’s Halol plant by a subsidiary of SAIC Motor Corp, China’s largest automaker, has inched closer to completion, with the Competition Commission of India (CCI) clearing the proposed acquisition, according to reports.

In line with its decision to stop production at its plant in Halol, Gujarat, which was set up in June 1996, GM was scouting around for a buyer for it. Around end-2016, it is learnt that a subsidiary of SAIC Motor Corp applied to the Competition Commission of India (CCI) to acquire these assets of GM India.

“Discussions with SAIC on the sale of Halol are progressing well. We continue to work with our employees on the implications of a sale and with the Government to secure necessary approvals,” a GM India spokesperson told Autocar India. 

General Motors, which has two plants in India, one at Halol in Gujarat and other at Talegaon near Pune, said last year that its Halol factory would function only until March 2017. The Halol plant has an annual manufacturing capacity of over 1,30,000 units while Talegaon is reported to manufacture over 1,60,000 units. Both plants have a very low capacity utilisation and by selling off the Halol plant, the carmaker will aim to strengthen its operations at Talegaon and turn around its volumes in India. Sales during April-December 2016 declined to 20,888 units, from 24,479 units a year ago with market share contracting to 0.93 percent from 1.18 percent for the same period.

Moreover, it has put on hold its planned investments on new models for India as the company undertakes a full review of its future product portfolio for the country, according to the spokesperson.

“As we stated publicly in July 2016, given the shift in customer preferences in India, we are conducting a full review of our future product portfolio and have put on hold future investment in our all-new vehicle family for the market until we firm up our product portfolio plan,” the company spokesperson said.

As a part of GM's effort to strengthen presence in the emerging market, Mary Barra, CEO of GM, had announced an investment of $1 billion in India, with plans to introduce 10 new models in the next five years. This investment was a part of the company's global plan to invest $5 billion to strengthen business in emerging markets through the development of an all-new vehicle family.

The investment was going to be made at the carmaker's Talegaon plant, where it announced plans to ramp up production to 2,20,000 units by 2025.

“Moving forward, our priority remains to establish the right business conditions for sustainable profitability. We are consolidating our manufacturing operations in Talegaon for both domestic market and exports. Exports continue to be an important aspect of our operations in India indeed. In 2016, GM India more than tripled exports compared to 2015 with 69,390 Chevrolet Beats shipped to Central and South America," the spokesperson further added.

GM's original plan, as announced in July 2015, was to launch 10 new models in India across the next five years, beginning with the Trailblazer SUV in October 2015 and the Spin MPV in early 2017. The Trailblazer SUV was first of the new models to be launched, when it was rolled out in October. But plans to launch the Spin MPV, which was expected to be carried out in early 2017, were shelved last year. Plans are also underway to introduce the new Cruze, the Beat hatchback, as well as the Beat notchback.