REVIVAL OF GENERAL MOTORS IN INDIA

Project Report

Submitted by:
(PGP/05/118) JASHVANTH NAIDU
(PGP/05/119) KARAN AGARWAL
(PGP/05/120) KRISHAN NAVAL ARORA
(PGP/05/121) KUMAR UJJWAL SINGH
(PGP/05/122) KUSHAGRA KUKREJA

MBA
Group No - 4

Under the Mentorship of

Dr. Arun Kaushik
Assistant Professor
Marketing Management
Indian Institute of Management Amritsar

August, 2019
 TABLE OF CONTENTS

1 EXECUTIVE SUMMARY ............................................................................................. 3

2 BACKGROUND OF PROBLEM ................................................................................... 4
3 PROPOSED QUESTIONS OF STUDY ......................................................................... 5
4 METHODS OF RESEARCH APPLIED ......................................................................... 6
4.1 PRIMARY RESEARCH ........................................................................................... 6
4.2 SECONDARY RESEARCH .................................................................................... 6
5 FINDINGS ....................................................................................................................... 7
5.1 PRIMARY DATA SOURCE .................................................................................... 7
5.2 SWOT ANALYSIS ................................................................................................... 9
5.3 PORTER FORCES ................................................................................................. 10
5.3.1 POTENTIAL ENTRANTS .............................................................................. 10
5.3.2 POWER OF BUYERS ..................................................................................... 10
5.3.3 POWER OF SUBSTITUTES ........................................................................... 10
5.3.4 POWER OF SUPPLIERS ................................................................................ 10
5.3.5 COMPETITIVE RIVALRY ............................................................................. 11
5.4 PORTER VALUE CHAIN ..................................................................................... 12
5.5 SEGMENTATION & TARGETING...................................................................... 12
5.6 NEW PRODUCT DEVELOPMENT FOR G.M. IN INDIA .................................. 13
5.6.1 CHEVROLET MALIBU (SEDAN) – STARTING RS. 12 LAKHS ............... 13
5.6.2 CHEVROLET BOLT (EV) – STARTING RS. 15 LAKHS ............................ 14
5.6.3 INCENTIVES FROM INDIAN GOVERNMENT .......................................... 14
6 IMPLICATIONS AND RECOMMENDATIONS FOR MANAGERS ....................... 15
7 CONCLUSIONS............................................................................................................ 17
8 APPENDIX .................................................................................................................... 18

2
 1 EXECUTIVE SUMMARY

General Motors has announced that it stopped selling Chevrolet brand cars in India at the
end of 2017. Although the company has one production plant in India and India being
fourth biggest auto market in the world, it still failed to make much traction.
We as a group will look on this project and come up with the marketing plan and strategy
in order to revive its car market. We would look for the new USP (Unique Selling
Proposition) for the company in Indian market, and would look for positioning and
targeting in the Market.
Industry of the Study – Automobile Sector
Fundamentals of Marketing Management to be applied - Marketing mix (4Ps); STPs;
New product development (NPD); B2C and B2B markets, Porter’s Five Forces, Porter’s
Value Chain & SWOT Analysis

Methodology – Secondary Data Analysis, Focus group analysis, etc.

3
 2 BACKGROUND OF PROBLEM

General Motors India Pvt. Ltd. was a partnership between General Motors and SAIC that
dealt in automobile industry in India. General motors had 93% stake in this partnership and
remaining by SAIC. It was the 5th largest car company in India after Maruti, Hyundai, Tata
and Mahindra. After approximately 21 years of operations in India, GM announced that it
would shut down selling operations in India by 2017.

In 1994, GM made a joint venture with Hindustan Motors to sell Opel cars and in 1999
bought HM’s stake in Opel. By 2003, GM was manufacturing Chevrolet cars. Cars like
Opel Astra, Chevrolet Beat and Cruze were instant hits in the India market due to their
relevance and needs they solved. Initially sales and revenues were great but bad post sales
services at dealerships and expensive parts created a negative image about the Chevrolet
brand which ultimately led to their downfall.

Major reasons why GM failed in India-

• Unlike most other companies GM did not try to innovate and produce new models.
Their major products were only Beat, Tavera and Cruze, latter still having a great
fan following in the market, however after so many years of launch, these cars had
lost their appeal. GM failed to adapt to dynamics of market and analyse the trends

• GM at one point had around 400 dealers, but reducing trust and bad customer-dealer
engagements led to shrinking of dealer touch points to about 200. For scale, Maruti
has approximately 1200 dealer touch points

• GM installed old and outdated engines in their vehicles which were unable to match
their competitors. Moreover, the quality of components got poorer and poorer over
time. Production quality fell and even Chevrolet Enjoy was just a shoddy quality
work

• Constant changes in senior management led to a non-existent long-term planning.

In 21 years, GM had 9 CEOs with an average tenure of 2.5 years

• Support from bondholders and banks despite bad financial policies [1] and
decisions helped GM stay afloat even after losses for a few years, but in the end,
losses outweighed the profits

4
 3 PROPOSED QUESTIONS OF STUDY

• How can GM generate trust among the Indian buyers again?

• How can GM provide diverse product portfolios on competitive prices?

• What way can GM generate USP for the company?

• What are the government policies and regulations that GM has to adopt?

• How can GM innovate in new age technologies?

• Which environmental norms does GM have to follow?

• How best can GM understand the Indian markets and the consumer needs in the
Indian subcontinent?

• What new norms does GM have to adopt in the BS-VI scheme?

5
 4 METHODS OF RESEARCH APPLIED

There are two types of research involved in this project, Primary and Secondary Research.

4.1 PRIMARY RESEARCH

We have surveyed approximately 175 people and asked them about their views on General
Motors and how overall inclined they are towards the company’s products. From a bird’s
eye view, results are quite negative. However, some loyal customers would still prefer to
buy GM’s cars. This is good news as it means they have not completely been forgotten by
customers. Some responders have also mentioned cool features which could be included in
new launches. Their brand association is still strong despite the setbacks they faced. With
BS-VI launching in 2020, GM can focus on repositioning itself in India with better features
and competitive pricing to woe lost and new customers to their cars.

4.2 SECONDARY RESEARCH

We have researched various websites and news articles about the fall of GM and the
reasons associated with them. Some of our sources come from IBEF, Economic times and
Overdrive websites. Most of the sources point to the bad customer-dealer experience and
highly expensive parts for the vehicle that led to wide spread dissatisfaction among
customers.

6
 5 FINDINGS

5.1 PRIMARY DATA SOURCE

The following data was acquired from a survey conducted among 170+ people. It
highlights their opinions and preferences based on past experiences with the brand and
automobile products in general.

Figure 1: Car type preference for near future buyers

Figure 1 shows what type of cars our responders prefer. We can see that SUV is the most
liked one, closely followed by Sedan and a few votes for Hatchback as well.

Figure 2: Most common problems faced by Chevrolet owners

7
Figure 2 shows which were the major problems faced by Chevrolet users. Bad post sales
was the most voted one, followed by expensive parts for repair.

PREFERENCE OF COMPANY
FIAT 16 41 74
NISSAN 17 41 71
GENERAL MOTORS 21 42 66
MAHINDRA 38 54 43
FORD 39 60 32
TATA 41 52 39 High
MARUTI 45 48 40 Medium
SKODA 46 50 36 Low
TOYOTA 56 53 25
VOLKSWAGEN 63 45 27
HYUNDAI 69 44 19
HONDA 72 49 16
NUMBER OF RESPONDENTS

Figure 3: Rank of company preference for buyers

Figure 3 shows that most responders would think of buying a Honda, Hyundai or
Volkswagen car in the near future. GM is among the bottom 3 companies in customer
preference.

Figure 4: Fuel system preference

8
Figure 4 shows the fuel preference of customers. This is more skewed towards traditional
fuel system, but after BS-VI launch it could sway more towards hybrid and electric.

5.2 SWOT ANALYSIS

Strength Weakness

• Robust Technological Capabilities • High debt

Enhances New Product Development
• Strong positions in North America and •
China provides sustainable business
growth
• Diverse products present in diverse
companies
• Heavy investments in R&D
Opportunity
• Ineffective senior management
Did not create Indian market specific
car and parts
• Did not relate to Indians in their ad
campaigns except for Cruze and Beat
Threats

• Positive outlook of global automotive • Stringent govt. laws and regulations

manufacturing could adversely affect operations, sales
• Industry could boost up revenues and and revenues
market share • Fluctuations of foreign currency
• Poised to benefit from growing exchange rate could have a material
demand for electric vehicles and impact on operations and financial
alternate fuel cars conditions
• New product launches • Intense Competition could negatively
impact market share, sales volume and
margins

9
5.3 PORTER FORCES

5.3.1 POTENTIAL ENTRANTS

The threat of new entrants is not so high in car manufacturing sector as there are many high
barriers of entry right from the huge initial investment, huge cost of fixed. Most of the
customers want to buy the car from the known brands as in India a car also represent the
social status. Almost all of the companies which are in the automobile sector right now
have large business groups and are big brands with high level of production which
obviously reduce the per unit product cost in the mass production. This is a great concern
for new entrants. Finding good and trusted suppliers again becomes a major issue as
existing companies have loyal supplier groups.

5.3.2 POWER OF BUYERS

Buyers have great power of negotiation in this sector as the customers themselves are
medium to big size dealers. They have a great say in the product price. After 2008 economic
crisis customers negotiation power changed drastically as during crisis period car
manufacturers had inventory and they are in immediate need of money. They had
significant cut down the product prices and at the same time demand has also reduced
because of the recession. Also, nowadays increase in the competition in car industry is also
the reason for increase in buyer power as they have many options. They are demanding the
attributes of the product along with the price.

5.3.3 POWER OF SUBSTITUTES

The threats in the car manufacturing industry are growing with rise of many substitutes.
Companies like Ola, Ubers has made the lives of customers much easier in commuting
quickly from one place to other at comparatively less prices. Mainly these can be
considered as alternatives raising from development of technology. Development of Metro
has been taking at rapid place in India, it promises less journey time along with affordable
pricing. With the changing mindsets of people and regulations from Government hybrid
and electric vehicles can be considered as the biggest threat for present players.

5.3.4 POWER OF SUPPLIERS

The relative capacity and size of the company and their suppliers affects the suppliers
bargaining power. Generally, all the manufacturers are global brands which leads to less
bargaining power for suppliers.
But in some cases, some parts of car are exclusively designed for specific vehicle, generally
these kinds of works are outsourced by suppliers. In such cases there is higher power for
suppliers regardless of the brand size. But if we consider overall picture local suppliers
generally have small power in negotiation.

10
5.3.5 COMPETITIVE RIVALRY
After 2008 strategies of companies has changed greatly. Companies are competing in
innovation to attract good number of customers. Companies have been spending significant
resources on reengineering to reduce the costs. This fueled the great rivalry among
companies in car manufacturing sector. Companies are even customizing vehicles based
on consumer preferences. Companies are watching each other work closely and are
immediately launching the product in competition with others.

Medium
Threat

Potential
Entrants

VERY HIGH
Medium COMPETENCY
Threat Competit
ive Buyers
SUBSTITUE
Rivalry Relatively High
Power

SUPPLIERS
Medium Negotiation

Power

11
5.4 PORTER VALUE CHAIN

Figure 5: Porter value chain

5.5 SEGMENTATION & TARGETING

We are going to use a mix of demographic, psychographic & geographic segmentation
variables in order to understand the different markets aptly and satisfy the changing needs
of the customers accordingly.

• Demographic segmentation-
o Age- Gen Y customers with age group lying between 24-40 years will be
our target customer, though the product will be for every age group.
o Income base segmentation-
▪ 8-15 lacs: Targeting medium earning groups with better features and
PODs (Chevrolet Malibu)
▪ 15+ lacs: High end premium car that would include EV car for the
long-term plan.
• “I’ve made it”- Consumers primarily interested in the social benefits of a particular
car brand. Attracted to the cars which carry high status. Malibu is for such
customers only.
• Environmentally Aware- For this segment there would be an EV.

12
 • Quality valuing- They are looking for technically advanced cars with latest
features, more interested in product quality and features and less interested in the
status symbol of the brand.
• Off Roaders- More interested in safety and reliability benefits. These consumers
often enjoy off-road driving often as a social activity.
• Geographical segmentation- Country wise reach. Mostly target urban & semi-
urban areas.
Customer analysis
B2C- sales through distribution channels
B2B and B2G- commercial fleet companies and govt to make the public transport system
(long term plan).
Mission- To care about a customer, not just when they purchase but for as long as they
own the vehicle.
Tagline- “A better car to compliment best people”
Distribution strategy- GM will use different channel of distributions such as their own
authorized showrooms, and authorized service centres, and e-commerce portals to make
products available to customers. Also, at showrooms there will be a virtual car setup which
will give the feel of original car and driving experience.
Competitive analysis- With targeted portfolio ranging high end segment cars with value
for money in form of high CC and improved features. Technological development and
expertise by GM is commendable. Main competitors will be Ciaz, Honda City, Verna etc.

5.6 NEW PRODUCT DEVELOPMENT FOR G.M. IN INDIA

5.6.1 CHEVROLET MALIBU (SEDAN) – STARTING RS. 12 LAKHS

As Chevrolet is in the big 3 automobile company of US, Malibu has fetched a great success
and is again coming in the US Market with its 2020 Edition.
We are looking to fetch the same success with its Indian Version Launch with modern
features. Its manufacturing base can be setup in the existing Talegaon Plant.
Points of Difference-
• Most Durable Indian Car (European NCAP Safety Crash Test Ratings)
• Headlights with Artificial Intelligence (Model Variable)
• OS-Based Voice Recognition System
• Hybrid Car Battery Charge through a Small Solar Panel (Model Variable)

13
 • Tablet View Infotainment System
• 360* Camera View (Model Variable)
• Tyre Pressure Monitoring System
• Hill Hold Control
Points of Parity-
• 6 Airbags
• Economical Mileage in line with BS-VI Standards
• Cruise Control
• Rear-window Curtain (Model Variable)
• Hybrid Car Variant (Petrol + Battery) (Model Variable)
• Rear AC Vent
• Sunroof Window (Model Variable)
• Wireless Charging (Model Variable)

5.6.2 CHEVROLET BOLT (EV) – STARTING RS. 15 LAKHS

In line with the Transport Minister, Mr. Nitin Gadkari, we are planning to launch the EV
editions of vehicle in India.
It would be launched on a pilot basis, as there is inadequate infrastructure for charging
points for electric vehicles in India.
Features-
• 238 Miles (383.02 Km) of range on Single Charge.
• 10.2 Inch Diagonal Colour Touch-Screen
• 25 Miles/ Hour of Charge
• 2019 NHTSA 5-Star Overall Official Score
• Interactive Infotainment System
• Customized Vehicle Features

5.6.3 INCENTIVES FROM INDIAN GOVERNMENT

• The finance minister announced tax rebates of up to ₹1.5 lakh on interest paid on
loans to buy EVs. The government has started from 1 April 2019, the second
phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles
(FAME 2) scheme, with an outlay of ₹10,000 crore.
• Makers of components such as solar power charging system and lithium storage
batteries and other components will be offered investment linked income tax
exemptions under Section 35, Income Tax Act, and other indirect tax benefits.
• The Indian government’s move to reduce goods and services tax on EVs to 5%
from the existing 12%—compared to the tax range of 29% to 45% on internal
combustion ones—can spur demand for such vehicles here as well.

14
 6 IMPLICATIONS AND
RECOMMENDATIONS FOR MANAGERS

Following are some of the strategies GM could adopt to reposition itself in India -

• The basic thing that the GM could do is first of all designing its strategy and product
catering to the Indian Customer’s needs. They should design their product and
market strategy especially for Indian buyers as the strategies working in the other
global market would not work here in the Indian Market as seen before

• GM has to build a long-term strategy for the Indian Market and should focus on its
top management

• For its short-term strategy the company first need to change the perception of
Chevrolet (GM) in the Indian market for which they need to work on the brand
recognition and brand association. Because of their bad experiences with Chevrolet
people still associate Chevrolet with the bad customer service and the expensive
car parts. So, Chevrolet has to come up with the marketing campaign where they
could advertise how they have changed with the previous product line and why the
Indian customers need to give them another chance

• Chevrolet should come up with any athlete just like Yuvraj Sigh who came back
after some break and still did well in his field, showing that how promising GM
could be in its second innings

• They should now open their own company retail outlets to evade the bad dealership
experience. Customers had mostly been complaining about expensive parts and bad
post sales services. Gm should take extra care that such issues don’t dissuade their
customers again from buying Chevrolet cars

• They should initially focus on quality with different variants than the quantity of
the car because they should initially focus on capturing the loyal customers, which
helps in WOM. In the buying decision of cars WOM plays an important role in the
Indian Market

• We suggest the management to that first they should come up with the Sedan
(Malibu) segment of cars initially with the BS-VI technology which would help
them to change the perception in the market as an environmentally responsible
manufacturers which they could also use in their marketing strategies (this could

15
 only be done if they could market their products before any other manufacturers).
It is suggested that they should come up with only Malibu because on focusing on
the single product they could change the customer perception easily and would be
able to retain their loyal customers. Later on, as they change the perception in the
market they could come up with other different products

• This could be the best time to enter the market as the GOI has make it mandatory
to move to BS-6 technology from BS-4 technology and it would require a drastic
change in the technology for every other car manufacturing player which would
create a level playing field for the players when it comes to the cost of
manufacturing of the cars

• For its long-term strategy, (Refer to Fig. 1) GM could start focusing on the Hybrid
and the electric car in the sedan segment of the car initially and then SUV later (the
segment for hatchback has been predominantly occupied by Maruti Suzuki which
would make it difficult for GM to enter). They could go for Chevrolet division of
the company to manufacture Bolt EV for the Indian Market. The GOI has provided
its vision and roadmap for the fast adoption of EV and their manufacturing in the
country which could help GM in their long-term strategy

• For B2B business, GM could collaborate with the GOI and could open their EV
manufacturing plants in the 11 cities that are cited by The Ministry of Heavy
Industries, Government of India for the introduction of EV in their public transport
system under FAME (Faster Adoption and Manufacturing of Hybrid and Electric
Vehicles in India) schemes. They could manufacture the electric public transports

16
 7 CONCLUSIONS

As we have seen by our primary and secondary research there were some of the very
obvious and grave reasons because of which the GM failed in the India Market. Because
of their lack of any particular strategy for Indian market and the high competition, the
company decided to stop selling their products here in India.
We in this project have proposed both short term and long-term strategy for the company
to change the customer perception about their old products and has also suggested the
products that they could come up with in the long term and short term according to the
Indian customer needs and future prospects. We have also suggested the marketing strategy
to change the customer perception for their old products.

We think that by focusing on the single product initially the company could take care of
their customers’ needs and improve their car services even further. They could also work
on the environmentally friendly products in the long run which would help them to shed
their tainted image which they formed during the Tavera scandal.

So finally, GM still has a lot of scope in the Indian market with changing government
policies and regulations while adopting to the sate-of-the-art technologies and
understanding needs of the Indian customers.

17
 8 APPENDIX

[1] The Economic Times. (2019). The real reason why General Motors has given up on the Indian
consumer. [online] Available at: https://economictimes.indiatimes.com/industry/why-general-
motors-has-given-up-on-the-indian-consumer/articleshow/58766801.cms

[2] Overdrive. (2019). What went wrong with General Motors in India? - Overdrive. [online]
Available at: http://overdrive.in/news-cars-auto/opinions/what-went-wrong-with-general-motors-in-
india/

[3] India and India, A. (2019). Automobile Industry in India, Indian Automobile Industry, Sector,
Trends, Statistics. [online] Ibef.org. Available at: https://www.ibef.org/industry/india-
automobiles.aspx

[4] Ghosh, M. (2019). India looks to lead electric vehicle race with latest push in budget. [online]
https://www.livemint.com. Available at: https://www.livemint.com/budget/news/india-looks-to-lead-
electric-vehicle-race-with-latest-push-in-budget-1562523548797.html

[5] http://chevrolet.co.in. (2019). Chevrolet Service in India, Authorized Service Network -

Chevrolet India. [online] Available at: https://www.chevrolet.co.in/

[6] Aol.com. (2019). AOL is now a part of Oath. [online] Available at:
https://www.aol.com/2009/05/31/after-101-years-why-gm-
failed/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig
=AQAAAI0dGH5oD7g-rZAGlAMP3jd0Yvu-
e4CyUOetZHZf2Ed_UofnvhYT9kKfNCd836AHGhkSKj_0-1BpHmgSKBpxDFmQC_68Rnc-
v089anbYeQO2oyywLUW8btaxS7ZnodoaqcCCs_b4YKfF9D4TUW4nwulHwm_Ref64pIrudLnFvG
wX

18