BEIJING/NEW DELHI — General Motors (GM) aims to grab at least 5% market share in India within the next decade, as it sees that market overtaking Japan as the world’s third biggest with projected annual sales of 8-million vehicles by 2025.
The Detroit car manufacturer, which is losing money in India even after 18 years in the country, will unleash a product blitz aimed at reviving sagging sales, and intends making India a new global manufacturing and export hub, taking some of the strain off South Korea, where labour costs have ballooned.
As part of a strategic plan to be announced this year, GM will launch newly designed subcompact cars into India, where buyers are shifting from no-frills econo-cars to models offering more room and functionality.
"India may be the last big white sheet of paper in the automotive industry," Stefan Jacoby, GM’s chief of international operations, said in a recent interview.
India’s car market has been steady for the past few years, with annual sales of just above 3-million vehicles, but Mr Jacoby sees that changing with Prime Minister Narendra Modi, who took office last year, vowing to reboot Asia’s third-largest economy.
India had regained confidence, especially after Mr Modi’s election, said Mr Jacoby, who joined GM from Volvo Cars in 2013. "We’re pretty optimistic. We see growth potential in India, and believe there’s a good opportunity for the Chevrolet brand to take share in this market. There’s more prosperity and buying power. Vehicles selling for $5,000-$8,000 will more and more disappear in India."
The gradual pivot to India mirrors moves by Ford and Nissan to modify their strategies to give them the ability to ramp up exports from India.
Under Mr Jacoby, GM has been realigning its global manufacturing operations to squeeze out better profits. It closed plants in Australia and Indonesia, and is to scale down operations in Thailand.
"India’s going to become a key global production and export hub for GM," said James Chao, Shanghai-based Asia-Pacific MD at industry consultant IHS Automotive.
He said India would partially replace South Korea as GM’s key Asian export base.
South Korea has for years been a low-cost export hub for GM, producing close to a fifth of its global output. But labour costs have risen by nearly half in just five years, pushing it into a high-cost bracket along with Japan.
"We have no concrete plans to close factories (in South Korea)," Mr Jacoby said, but to remain competitive GM Korea must find ways to "drive efficiencies over time".
GM’s Korean factories produced about 630,000 vehicles last year, but capacity use of about 75% was too low to be profitable, analysts said.