In its global push for profitability, General Motors plans to yank the Chevrolet brand out of the hands of Indian consumers.
The automaker announced a wave of restructuring in overseas markets yesterday, a large part of which is the cancellation of nearly $1 billion in investment in India and the pull-out of its only brand. Until recently, GM had hoped to cater to the country’s growing middle class with a new line of region-specific Chevy models.
GM also plans to sell its South African division and cut back on staff in Singapore. The move will help the automaker free up money to funnel towards its biggest markets — North America and China.
The automaker’s overseas operations have struggled in recent years. Just two months ago, it reached a deal with France’s PSA Group to unload its money-losing European Vauxhall and Opel brands. The most recent plans will see it save $100 million per year in unprofitable regions.
“What are we spending our time doing?” GM President Dan Ammann told Reuters. “Are we spending time pursuing opportunities … or all of our time fixing problems?”
Ammann said by cutting back in these markets, GM can focus more senior management time and engineering effort towards its looming truck and SUV “onslaught.”
While Indians can say goodbye to GM vehicles — which faced increasing competition from the likes of Suzuki — the automaker will continue to build vehicles for export to Mexico, Central and South America at its Talegaon assembly plant. The GM design and engineering center in Bangalore will continue operations.
In South Africa, the automaker plans to stop producing Chevrolet vehicles after doing so in the country for 91 years and sell its assembly plant to Isuzu Motors. The Japanese automaker will also buy GM’s 30-percent stake in a joint truck-building operation for an undisclosed sun.
“We determined that continued or increased investment in manufacturing in South Africa would not provide GM the expected returns of other global investment opportunities,” said GM International President Stefan Jacoby in a statement.
Earlier this year, GM announced a pull-out in east Africa, with Isuzu purchasing its 57.7 percent stake in that venture. GM sales in both India and South Africa will cease by the end of the year.
[Image: GM]
“Ammann said by cutting back in these markets, GM can focus more senior management time and engineering effort towards its looming truck and SUV “onslaught.””
Until the next oil shock leaving them with few options.
“…the next oil shock” will be long in coming, if it happens at all. There’s no shortage of supply, shale oil/fracking has placed a ceiling on crude prices, and with that OPEC no longer runs the show.
GM has plenty of failure modes up its sleeve that don’t involve oil prices.
Still, putting all their eggs in the trucks and SUV basket doesn’t seem like a terribly smart idea. It really does limit them to specific markets. I know we tend to focus on the American market here but GM ignores the rest of the world (with the stated exception of China) at it’s own peril.
“Still, putting all their eggs in the truck and SUV basket doesn’t seem like a terribly smart idea”……..but, but n o b o d y is buying sedans and coupes anymore. We have all seen the sales numbers and the myriad of articles re: the demise of sedans.
56BelAire In North America and Europe to a lesser extent, yes, you’re absolutely correct.
That’s not the case in a place like India where having a car, even a small crappy car by our standards, is a luxury. We thumb our noses in disdain at the Chevy Sonic but to most Indians, it’s would an aspiration to own one.
The Indian economy doesn’t get a lot of press here but it’s a huge and fast growing economy. The car market there may be in it’s relative infancy so the profits aren’t necessarily there yet. IMHO, I just think GM will regret leaving such a large and high potential market in the future.
Why do you say they are putting all their eggs in the one basket? They have been pursuing electrification hard.
@sutherland555
I would say GM and Ford are very exposed
Looks like both will become NA specific Pickup and SUV Companies
If only they were more like VW in their prison-risking bid for world domination, something instilled in VW from the start by it’s creator, Adolf Hitler.
John Taurus:Ease up on the Hitler references. Henry Ford was a pretty staunch anti-Semite himself. He even got a citation from Adolph for his efforts…
Except the Volt, Bolt, Cruze, Malibu all of which are well made competitive vehicles that are fuel efficient or electric.
You darn right!
We must ignore pesky facts that don’t portray GM, and the American auto industry as a whole, in the worst possible light.
They have competitive cars, and with sales of cars from ALL brands tanking, that money may have been better spent elsewhere.
Falling car sales isn’t a GM problem, it isn’t a Ford problem, it isn’t an FCA problem. Why? Each have a lineup of vehicles which are decidedly NOT cars that sell very well and make them lots of money. The Malibu, the Fusion, the CTS, the Demon…they’re all just extras that come from what are essentially truck and utility vehicle manufacturers.
Falling car sales are an issue for Toyota and VW especially, which is why we see all these “ohh bad move GM” from the anti-American car crowd. They see the tide turning and it isn’t looking pretty for their precious Camry, Corolla, Prius, Golf, Passat. Too much reliance on car sales in a market clearly cookoo for (ever increasingly efficient) truck/utilities have their gods of the auto world shaking in their boots.
Toyota has tried and tried to compete with Ford, GM and Ram large trucks. The Tundra has never measured up, and is only bragged about by those who use it as a manly Corolla alternative. People who’s work depends on a truck that gets the job done don’t depend on a Tundra.
You’ll hear all the excuses, “its these flyover-state-dwelling losers with BLIND BRAND LOYALTY” lol, is that why you see a normal suburban house with a Camry and a Silverado in the same driveway? Or an Accord and an F-150 (like my cousin’s)? The only driveways with Tundras are the retirees and the pavement-pounding cubical worker bees/pseudo weekend warriors with a 20′ boat that sees the water maybe twice a year and a Lowes card he makes sure everyone sees.
How long has the F-Series been top seller now? 40 years? And did it do that by standing idly by and watching the market move on past, as Toyota has done? How many new F-150s have there been since the last all-new Tundra (which was about a decade ago)?
RobertRyan and the Toyotaphiles know, trucks and utilities are where its at, and VW and Toyota are decidedly weak in both. Even as old as the outgoing Expedition was, it was easily outselling the Sequoia by a wide margin. Even as terrible as the current Explorer is, its still the top seller in its segment. Toyota has the Rav4 and the Lex RX. That’s their only two decent cards to go up against players with half a dozen aces in their hand.
@JohnTaurus:
Your windy clucking is refuted readily: in New Mexico, where we actually need our trucks to start and run every day, there are plenty of Tundras of every generation out there doing your precious man’s work. The only area where the current Tundra lags is in unnecessary electronic geegaws that fail with predictable regularity in Ford/GM products. Also, the fact that the Tacoma exists rebuts any silliness concerning capability.
Do try to keep up.
The reason that both Toyota and Volkswagen are the world’s top automakers is because they fight for marketshare in every market. I realized after selling off their European operations, GM will never regain their top spot again. I believe for the next century it will be Toyota at the top, and unlike GM they won’t make the same mistakes. Last year GM lost to both Volkswagen and Toyota by just 100,000 units. Without Opel sales GM could now lose the sales race by 300,000 or more vehicles.
Since GM left Europe their stock has not improved.
GM should have pulled out of China instead of Europe and India. But GM is the king of short term thinking.
GM makes a profit in China. If they can’t break even in Europe or India by now it’s unlikely they ever will. It’s not as if someone passed a law saying they couldn’t return if they wanted to.
Europe is a major growth market? India is, but they are looking at a huge population but with low margin vehicles. India further will be looking at restrictions on ICE vehicles to deal with the pollution crisis in places like New Delhi. Both Europe and India are looking at a future auto industry much different than today. Question is will manufacturers be able to pull decent profits from EV’s.
“GM should have pulled out of China instead of Europe and India. But GM is the king of short term thinking.”
Pretty clueless statement. EV’s will be huge market in China, they’ve already outlawed gas scooters. GM knows more about building a good EV than anyone else, including Tesla.
@Carlson Fan
Not really GM has made a big mistake
That short term thinking has dropped them from first to third place in international sales.
I don’t know if pulling out of India is a good idea, but Europe certainly seems to be based on recent travel experiences. The EU could be the next Venezuela.
This feels like a bad idea. An emerging market like India should be critical for a global brand. Is almost like admitting that big trucks and SUVs are the only thing they can make……hummmmm may have just answered my own question….
Agreed. Even if they’re having a tough go of it at right now and for the short term, it’s got to be worth at least hanging in there and keeping some sort of market share. It will be very difficult to to get back into the Indian market and even marginally succeed after pulling out. It really feels like GM is shooting itself in their own foot with this move.
It’s not that GM can’t build small cars, it’s just that the low profit margin requires volume and that requires massive capital. They’re looking longingly at the Mercedes business model they used to have with Cadillac, and think they can duplicate the results with trucks and SUVs here and electrics and long wheelbase Buicks in China.
The logical end point is fewer and fewer vehicles with higher and higher prices, ending up with million dollar vehicles for Arab sheiks… er, Texas frackers. The idea of offering “a car for every purse and purpose” is now dead. There are too many small developing world automakers to compete with.
“It’s not that GM can’t build small cars,”
Sorry Bud. GM can’t build small cars. Plenty of documented history over the last 100+ years.
It’s called “shrinking your way to success”. And it’s worked brilliantly for…………
“Emerging market” does not equate to “high income population” (India has a lot of people, but they don’t make much money – and that probably won’t be changing for quite some time).
Actually it has changed. At the turn of this century India had less than a dozen shopping malls. By the end of this year it will have nearly 800.
That is indicative of the massive increase in disposable income and the growth of the Indian middle class. Another example is the growth of highrise condos/apartments.
And all those shoppers need some form of transportation. An inexpensive electric or hybrid vehicle to replace their motorbikes or diesel vehicles would be the most likely choice.
RenCen: After selling Opel, and with these latest moves, we will focus most of our attention on Chinmerica.
“Chinmerica.” And to think Joss Whedon came up with that premise for “Firefly” 15 years ago. Smart guy.
(Just don’t go to Miranda. Ever.)
But that’s where that’s where Walmart-brand Han Solo discovers the truth behind the space zombies!
Diss “Firefly” at your own goram peril!
Never saw it but +1 for Firefly.
I guess my honest concern is are they seeing a global downturn? If you’re only seeing profits in the biggest markets, that doesn’t bode well for global business overall. Is this a lowering tide?
Ebb tide.
At the moment it feels like GM is turning itself into AMC, an American only car company that’s reliant on SUVs….
Maybe they will surprise us all and buy another car co?
AMC was never reliant on SUVs under their own management, the last decade they were controlled by the Fenchies who discontinued the non 4×4 line. Their bread and butter from 1954 to 1979 was automobiles, and neither Nash nor Hudson had much late model success with trucks. They made plenty of mistakes, but most of those were in trying to be head to head competitive with the big three. We remember their SUVs because they were a little ahead of the market there and successful with it, but to suggest their downfall was in anyway due to their SUVs would be a misunderstanding of history.
Jeep isn’t a SUV?
AMC owned Jeep from 1970, but if anything, they should have relied MORE on their Jeep line than they did. You could say they failed trying to be a car company and would still be around if they focused only on SUVs. It’s a “what if” history, but certainly Jeep was the strong part of AMC, hence it’s still with us (along with AM General, also not a car maker)
Somewhat relevant to this question is the fact that when GM owned a share of Fuji Heavy Industries, it sold Subaru Foresters as Chevrolets in India.
AMC was bought by Renault and then Chrysler and so had factories in Bordeux (Simca) and Austria (that’s actually where most Cherokees came from until 1987). And Jeep, despite the decades of rubbish they produced, never left Europe…
Another possibility is that they are trying to make themselves look attractive to a buyer. VW anyone?
Now that could be possible. Corporate run has no family pride to worry about, just stock holder returns.
As if VW has a ton of cash piling up after buying off the dieselgate fiasco.
Apparently they see no end in sight for the unquenched need for SUVs here in America and Buicks in China. That said, long-term, I wonder at the wisdom of pulling out of an emerging market like India. Sure, we don’t necessarily want small cars, but many, many other markets do. I guess GM can only see profits in already established countries.
Its about raing the stock price so the board of directors can cash in. Once they’ve wrecked the place and sold the ruins to the Chinese, they’ll leave with a golden handshake and get their cousins and uncles to give them board positions on another Fortune 500 company…
As usual, no shortage of GM advice here. Hoping GM reads this column.
Just imagine if they had bothered reading the “Death Watch” ones…
It was fairly commonsense. Any company that has more money going out than coming in, for years on end, is probably circling the drain. This is likely what GM is facing again, or is about to, except this time can’t expect another bailout.
“This is likely what GM is facing again, or is about to”
And on what basis do you make this statement? Obviously not on the recent financial results like Q1
“Net income in the latest period climbed to $2.6 billion from $2 billion a year earlier, while revenue rose 11 percent to $41.2 billion from $36.27 billion in revenue a year ago”
Or fiscal year 2016,
“The company also posted record earnings per share of $6 for the year, adjusted pre-tax margin of 7.5 percent, revenue of $166.4 billion and North American adjusted pre-tax earnings of $12 billion. The company’s revenue grew 9.2 percent vs. 2015 totals”
It would be nice if you could provide some factual basis for you comments.
I’m just reading between the lines. I’m not gonna advise anyone to dump their GM stock, but regardless of what GM says, them selling-off brands and abandoning markets speaks more to me than a healthy last year and Q1.
The “income” was produced by selling off most of their assets !!
The “income” was produced by selling off most of their assets !!
Really? Can you show me where in the financial reports that shows up?
What assets did they sell in 2016, or that were reported in Q1?
I’m just reading between the lines. I’m not gonna advise anyone to dump their GM stock, but regardless of what GM says, them selling-off brands and abandoning markets speaks more to me than a healthy last year and Q1.
Well I do not see what you see in between the lines. I actually doubt you have spent any significant time reading any lines based on your comments.
GM’s actions in Europe and now India are consistent with what they have done for a number of years now. They are focused on creating a financially healthy company.Concentrating your capital into areas where there is the best opportunity to provide a return, is actually what good operators do.
They sold off Vauxhall/Opel to PSA for $6 bn, GM East Africa to Isuzu and factories in Thailand, India and Indonesia to SAIC.
Its all there in their balance sheet.
Interesting development. As someone who has watched GM from a business perspective for many, many years, they have had a string of consistent international pullbacks. First pulling Chevrolet out of Europe, then getting out of Russia altogether, then turning Holden into nothing more than an import & rebadge job in Australia, then selling Opel/Vauxhall to PSA, now pulling out of India. In many of these cases (Opel, for example), it wasn’t a short-term effort–GM had owned Opel and had been a big player in Europe for decades. Likewise, you don’t back out of Russia and India both (two of the most promising long term emerging markets) without much thought.
From a business perspective, it will pad the bottom line in the short term to focus on your strengths. China, North America, and to a lesser extent, Brazil (where Chevrolet is now the #1 selling brand) and South America. From a long term perspective, GM is certainly giving up on the quest to be world’s #1 in volume. Things might really be changing at RenCen. This focus on their strengths will probably do wonders for their profitability, and boost their stock price. I wonder if it will cause an internal review at Ford, who it must be said is much stronger in Europe, Russia and India than GM was.
Ten years ago I thought that India would eventually surpass China as an economic power. It’s a democracy, they allow 100% foreign direct investment, there is a large and growin, English speaking middle class, and there is an entrepreneurial attitude among many Indians. It’s also a former British colony, something many of the world’s most successful countries have been.
Just about every global automaker invested big money in India.
So what happened? A lot of people blame endemic corruption.
Still, GM says they will continue to use their Indian R&D center and their factories there as a manufacturing base for the Asia-Pacific region.
“Pull out? Doesn’t sound manly to me.”
George Carlin
Corporations tend to spread out to new markets when they can and they’re healthy, then reel it in when they’re weak.
When very profitable, they need to keep extending themselves (new products, new brands, new markets, new equipment, more personnel, etc) including buying up weaker competitors, to grow and otherwise not send so much of their excess profits to the taxman.
The history of GM buying and selling subsidaries shows just how little vision they have for the future. I would expect one of their Asian competiors will take up the slack.
aren’t we supposed to spend a Billion on a soccer team first?
The usual suspects on an anti-GM tirade. We have no inside info on why GM thinks it should shutter it’s Indian division. I have no ideas either.
However, during the Great Financial Crisis, folks told GM to “be more like Toyota”. And after the loan guarantees (bailouts for the remaining tea baggers, I mean tea partyers), folks told GM to make enough money to never need a loan guarantee again.
So, they’re doing these things. Being more like Toyota and making enough money to not need loan guarantees again. They’re shedding liabilities, employees and under-performing subsidiaries; not unlike GE or other big companies, i.e., Ford.
But let’s not information we don’t have and a drive to make money get in the way of a good rant against GM. Because all of these armchair quarterbacks know the global production situation…
Even Tata has a hard time selling the Nano in India. Chew on that for a while.
Let’s face it, the Nano isn’t exactly a cutting-edge vehicle. A great many Indians choose pedaling over flushing money on a Nano. There really is such a thing as “too cheap”.
Wuling is too cheap. It makes a Nano look like a hand-built Audi. BTW, the principal competition is Maruti.
@Higheriq: The issue with the Tata Nano, is that it was specifically designed for the Indian market. Which is why I find their lack of success all the more ironic. While the Suzuki Maruti models currently rule, it wasn’t all that long ago they were still competing against the likes of the Hindustan Ambassador.
I’ve never been to India and admit to not knowing a great deal about the country. Even with all of the automakers efforts to “crack” the Indian market, it appears to me that (what I would call the) scooter is still king of transportation for an economy on the rise. From what I gather, it will still be a while before the average Indian will have the capability to assimilate an automobile into their lives.
With regard to GM’s recent move there, we have a saying here that doing the same thing over and over again and expecting different results is the definition of insanity. I believe that Ms Barra has taken the threat that GM will never receive overt US government assistance. To that end, it seems they are rationalizing business and maximizing profits where possible.
Which sun was Isuzu going to trade for those SA operations? Not our one I hope.