Struggling to get a foothold in the Indian automobile market for the last 20 years, the American car-maker General Motors India has postponed the closure of its Halol facility in Gujarat till March 2017.
After the announcement made in July last year about cessation of manufacturing activity at Halol from June 2016 onwards, the latest decision extending the production at the site shows the company’s bid to stay relevant in the Indian market.
GM revealed that it plans to manufacture ‘upgraded Tavera MUV’, one of the most successful models for GM in its two-decade presence in India. Made with specifications to suit Indian users and roads, Tavera currently comes with BS III engine, but with new emission norms set to kick in from April 2017, it would require BS IV engines to meet the requirements.
The company is in discussion with Japanese car maker Isuzu Motors to outsource the BS IV diesel engine for new Tavera. An e-mailed query sent to GM India President and MD Kaher Kazem remained unanswered.
“Currently, Tavera is the model that can help the company stay afloat in the Indian market. But in 20 years of its presence, if GM has only one model to survive on, the future appears bleak for the company,” said a sector expert.
Labour crisis According to insiders, GM's experience in India since 1996, when it rolled out its first model from Halol facility, has been a sour one. Termed as the mother plant of GM in India, the Halol facility had remained mired in controversies over labour issues from 2010 to 2014.
Unhappy over the repeated labour crisis, GM last year decided to move manufacturing from Halol to its second plant in Talegaon in Maharashtra.
The company leaders told the workers that the plant in Halol ‘did not give good performance' and decided to lay off several post June 2016. The company employs around 1,000 workers.
In its attempt to get out of Halol, GM had initiated discussions with China's Shanghai Automotive Industry Corp (SAIC) to sell the facility.
But due to high stakes of workers being involved, the State Labour Department conducted hearings before allowing the company to close its operations.
“At the hearings, the company failed to justify its closure. Hence, the company withdrew its application for closure and extended the operations till March,” a source involved with the company operations said.
“From the very beginning GM had lost its way in India. It had no specific strategy for the Indian market. First, they introduced premium cars, which failed to garner customers, later they entered the small-car segment, but by then it was already crowded with competition,” said an industry source. Financially, too, GM bled heavily in Indian markets due its “wrong strategy”.
In 2014-15, the company's accumulated losses had touched ₹6,552 crore with a total monthly sales of around 4,000 units of all models — Tavera, Enjoy, Cruze and Beat.
However, as a strategy for the future, the company plans to launch at least five new Chevrolet models in two years, including the new Trailblazer, new Beat, Essentia, new Cruze and Beat Activ.
The extension of manufacturing at Halol facility is looked at as a development that will provide more time to ensure an orderly transition for employees, suppliers and other stakeholders.
“GM India will continue with our plan to consolidate manufacturing at our Talegaon plant,” the company announcement quoted Kazem.
“We are exploring a number of options in relation to the Halol site, including its sale. Selling the plant may include contract manufacturing to ensure continuity for the upgraded Chevrolet Tavera,” he said.