GM to shrink India operations

Dhaka,  Wed,  28 June 2017
Published : 18 May 2017, 14:11:37 | Updated : 18 May 2017, 14:11:44
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GM to cut operations in India, South Africa

Reuters
General Motors Co plans to quit selling vehicles in India by the end of this year and will sell operations in South Africa, the latest steps in a strategy of focusing cash and engineering effort on fewer, more profitable markets.

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. It will cancel most of a planned $1 billion investment to build a new line of low-cost vehicles in India.

About $200 million of the charge will be a cash expense, GM said. The moves are expected to save $100 million a year in a sector of GM's global business that last year lost about $800 million, the company said.

The US automaker also has said it is investing about $600 million a year in efforts to develop autonomous vehicles and transportation services.

GM, like its Detroit rival Ford Motor Co, has found it increasingly expensive to compete in emerging markets outside of China, and they sold just 49,000 vehicles in India and South Africa combined last year.

Chief Executive Mary Barra travelled to New Delhi in 2015 to announce a plan to invest $1 billion there to build a new line of Chevrolet models developed as part of a Global Emerging Market vehicle programme - GEM for short. Since then, auto sales overall in India have slumped, and GM has failed to gain traction against incumbents such as Maruti Suzuki India Ltd.

Now, GM plans to stop selling Chevrolet brand vehicles by the end of the year and will produce vehicles only for export at its remaining factory in Talegaon. The company currently employs about 2,500 workers there.

GM said it would continue work at its design and engineering centre near Bangalore.

In a separate move, GM plans to stop building Chevrolet vehicles in South Africa and sell its South African factory to Japan’s Isuzu Motors Ltd, along with the 30 per cent stake the US automaker owns in a truck venture with Isuzu Motors. Isuzu agreed in February to buy out GM's 57.7 per cent stake in a joint venture in Kenya.

The automaker also will cut an undisclosed number of staff at its GM International Operations headquarters in Singapore. About 200 people work in that operation, the company said.

Since Barra took over GM in 2014, the one-time largest automaker in the world has taken aggressive steps to narrow its focus to China, the highly-profitable North American light truck and sport utility market, Latin America, vehicle financing and transportation services that ultimately could use autonomous vehicles.
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