General Motors Exits India – A Wise Move?

General Motors India shocked the Indian auto industry on May 18, 2017, when GM India
MD and President, Kaher Kazem announced the company’s official exit from the Indian
automobile market as part of its global restructuring program. However, the company plans
to continue exporting cars from India and will also maintain its research & development and
technical centre. Following the announcement, he also stated “It was a difficult one for GM
India, and the decision that has taken is not lightly at all. It came after a lot of careful
considerations and planning and after we assessed many different options”.
Two years from the exit decisions, GM Global CEO said: “India is a strategic market and will
invest further”. The decision to exit now questions many untold and unheard situations that
forced the company to close down its operations.

The question remains, is GM’s failure in India was the inability of the company’s
management to formulate and implement long term strategies for such a big market?
About Kaher Kazem – MD and President of GM India
Kaher Kazem has a long and distinguished career in manufacturing, business operations and
leading key markets in the automotive industry. He has the experience and global
perspective to lead General Motors India to a sustainable and competitive future. He
completed his Bachelor of Engineering (Electrical and Electronics) from University of
Adelaide and started working with General Motors in 2012 as the President and Managing
Director, GM, Uzbekistan.
Kaher Kazem served as the Managing Director and President of General Motors India for 1
year and 8 months from January 2016 to September 2017. Prior to this, he was the Chief
Operating Officer (COO) of GM India for a short tenure of 6 months.
From September 2017, after leaving his position in GM India, he as appointed as the CEO
and President of General Motors Korea.
After replacing Kazem, Sanjiv Gupta, Chief Financial Officer retained his responsibilities and
duties.
About General Motors
General Motors is an American multinational corporation founded by William Durant in
1908. It is divided into 4 major business segments, namely: GM North America (GMNA), GM
International Operations (GMIO), Cruise, and GM Financial. The company led global annual
vehicle sales for 77 consecutive years ranging from 1931 to 2007, which is longer than any
other automaker, and it is still among the world's largest automakers by vehicle unit sales.
In 2010, the GM made an Initial Public Offering (IPO) that was one of the world's top five
largest IPOs till today. The company also become the largest American automobile
manufacturer and also ranked 13 th on the fortune-500 rankings by the total revenue of the

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US in 2018. General Motors manufactures vehicles in 15 countries, and its major brands are
Chevrolet, GMC, Cadillac etc.
Mission and Vision Statements of GM

General Motors is the 1st automotive company to mass-produce an affordable electric car,
and the first one to develop an electric starter and airbags, GM has always pushed the limits
of engineering.

Companies policies and technologies promote a cleaner planet from supply chain to
manufacturing to the vehicles they put on the road.

Across 14 recent new-vehicle launches, they’ve trimmed an average of 357 pounds per
vehicle, by saving 35 million gallons of gasoline and avoiding 312,000 metric tons of CO2
emissions per year.

Today, GM’s vehicle manufacturing process has the lowest environmental footprint in their
history, thanks to steady progress toward achieving our 2020 operational commitments to
reduce energy, water, carbon and waste intensity.

We are General Motors. We transformed how the world moved through the last century.
And we’re determined to do it again as we redefine mobility to serve our customers and
shareholders and solve societal challenges.

World Presence
General Motors employs more than 200,000 people and run its business in more than 140
countries.
South America
In 2008, Brazil was the 3rd largest country in terms of sales. It sold around 550,000 General
Motors vehicles. In the same year, even Argentina, Venezuela and Colombia also made sales
of somewhat 300,000 vehicles. The total sales of South America, including all other
countries were the same as of China.
North America
In 2005, the company announced that its emblem “Mark of Excellence” will be appearing in
all the vehicles that would be produced in North America. In 2012, it also captured 18% of
the total US market share. Due to multiple issues, in 2018 GM laid off around 14,000
employees and ceased its production of 3 locations in North America.
Europe
In 2012, PSA Peugeot Citoren (a French multinational automobile manufacturer) and
General Motors formed an alliance, in which GM acquired 7% of the PSA Group. The
ownership was soon divested on December 13, 2013, generating "gross proceeds of €0.25
billion."

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Africa
General Motors started its operations in Africa in 1913 through General Motors South Africa
(GMSA). It became the independent Delta Motor Corporation and owned a 49% stake in it.
By 2014, GM targeted production of 50,000 cars. However, it could not happen because of
labour issues and strikes. As a result, in May 2017, GM declared that it will not operate in
South Africa and will sell its business to Isuzu (Japanese company).
Oceania
General Motors is also present in Australia, Thailand, and New Zealand. However, in 2020
GM announced that it would exit from all the Oceania markets but even after the
announcement it has continued to have to some presence in Australia as they are planning
to export some of their brands like Chevrolet, GMC, Cadillac and Buick.
General Motors India Private Limited (GMIPL)
GM entered India in 1928 and started their business of assembling cars, trucks and buses. It
also did ties up with Hindustan Motors for off-road equipment. However, they ceased its
assembly operations in 1954.
In 1994, GMIPL was formed as a joint venture where 50% share was captured by Hindustan
Motors and other 50% by General Motors to produce and sell Opel (French Automaker)
branded vehicles. Later on, in 1999, GM bought Hindustan Motors and continued to sell
Opel cars till 2003 in Halol facility. GMIPL also started production of Chevrolet cars in that
year at the same place.
In 2003, the company opened its first technical centre in Bangalore, which includes R&D and
vehicle engineering activities. It expanded in more sub-units like vehicle design studio,
transmission design and engineering.
In 2006, GMIPL opened its 2 nd vehicle assembly plant in Talegaon which subsequently
started production of Chevrolet cars in the year 2008.
In 2009, the company announced it entered into 50–50 partnership with Shanghai
Automotive Industry Corporation (SAIC) of China, which is the partner of General Motor’s
main venture in China. In 2012, GM increased its stake from 50% to 93% in SAIC by buying
43% from the Chinese partner.
General Motors became 5th largest automobile manufacturing company in India after Maruti
Suzuki, Hyundai, Tata Motors and Mahindra. After 21 years of successful operations, the
company announced its exit from India as a part of its global restructuring program.
The automobile market in India
India is expected to be the world 3rd largest automotive market in terms of volume by 2026.
Currently, India’s annual production of vehicles is around 25 million in 2017 and 29 million in
2018. Indian industry is expected to reach 300 billion by 2026.

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Indian market is seen as the great potential for the future automobile sector. The current
vehicle penetration rate is only 32 vehicles per 1000 people, and it is expected to grow till
72 vehicles per 1000 people by 2025. India will also become the youngest nation by 2025,
with an average age be 25 years. It is expected that household income will increase by 3
folds ranging from $9393 in 2010 to $18448 in 2020.
The Indian automobile industry is supported by multiple factors like availability of skilled
labour at reasonable cost, robust Research and Development centres and low-cost steel
production. The industry also provides ample opportunities for investment and direct and
indirect employment to skilled, unskilled labour and semi-skilled labour.
Government of India is also taking various measures to make India among the top 3 markets
for the automobile sector. They encouraged foreign investment in the automobile sector
and allowed 100% FDI under this sector.
Some of the initiatives taken by the Government of India (GOI) are:
- Under Union Budget 2019-20, the government announced to provide additional
income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to
purchase electric vehicles.
- The government is also planning to develop India as a global manufacturing centre,
an R&D hub and an incubation centre for start-ups in electric vehicle space.
- The GOI is also planning to set up R&D centres so that the Indian industry standards
will meet the international standards.
- They have also shortlisted 11 cities in the country for the introduction of electric
vehicles (EVs) in their public transport systems under the FAME (Faster Adoption and
Manufacturing of (Hybrid) and Electric Vehicles in India) scheme.
- In 2019, the Government of India approved the FAME-II scheme with a fund
requirement of Rs 10,000 crore for 2020.
In order to meet the growing demand, various automakers have started investing heavily in
multiple segments of the industry in the last few months. The industry has also attracted
Foreign Direct Investment (FDI) worth US$ 22.35 billion from 2000 to 2019.
Many companies like Hyundai, Tata Motors, Toyota, and Honda are either planning to invest
more and expand or planning to set up another factory for launching hybrid and electric
cars.
Industry trends: The latest trends in the automotive sector are:-
- The Government’s vision of 100% electrical mobility by 2030
- India aims to reduce its carbon footprint by 33% to 35% by 2030
- There is a positive GST impact, which will reduce the overall cost structure of the
Indian automobile industry
- Offers tax benefits and discounts by replacing an old vehicle with the new one

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What went wrong?
Starting from the top management, GM had 9 Chief Executive Officer’s in the 21 years of
operations with an average tenure of 2.5 years for 1 CEO. In Comparison to Maruti, it has its
5th CEO in the 35 years of operation.
Indian office had to report to the South-Pacific office, and it controlled many aspects of the
business. Indian CEO also had to participate in many committees. Indian office often lacked
in implementing product and marketing strategies.
In the 21 years, GM introduced 20 models, out of which half of them were withdrawn. The
price of these 20 models was ranging from Rs. 3,00,000 to Rs. 30,00,000. The company did
not work much on brand building, and loyalty rather focused on launching new models in
the market.
Chapter 11 Bankruptcy
GM was on the top list of closing stores in 2009 in the USA. It announced it would be closing
around 2500 retail stores to keep itself from the bankruptcy court. Following this incident,
GM also got featured in the top list of retail job cuts in 2009. However, even after closing so
many stores, the company didn’t stop itself from bankruptcy and filed for chapter 11 on 1
June 2009. It was 4th largest bankruptcy of the US after Lehman Brothers, Washington
Mutual and WorldCom.
As part of the reorganization, the company auctioned off its assets in section 363 sale. It also
discontinued the brand Hummer; this deal has created a net wealth of $ 150 million. In 2009,
GM also sold the Saturn brand to Penske automotive group, and Swedish automotive group
acquired Saab Brand.
The "new GM" is formed from the purchase of the desirable assets of "old GM" by an entity
called "NGMCO Inc." via the bankruptcy process. NGMCO Inc. was renamed to "General
Motors Company" upon purchase of the assets and trade name from "old GM”. On July 10,
2009, a new entity, NGMCO Inc., purchased the operations and trademarks from General
Motors. The purchasing company, in turn, changed its name from NGMCO to General
Motors Company, as part of the reorganization.
After this incident, stocks were stagnant, and the company was facing multiple issues from
the investors.
GM also faced tough competition from the major Indian players. Maruti and Hyundai
combined hold 65% of the total Indian market share, which makes it very difficult for any
other player to enter and sustain.
General Motor’s timeline after restructuring
2010: Closes its Antwerp, Belgium assembly.
2012: Closes its Bochum, Germany assembly plant and sells its Strasbourg, France
transmission operations.

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2013: Announces Chevrolet’s exit in Europe by 2015, and ceasing manufacturing and
engineering in Australia by 2017.
2015: Largely exits Russia market; announced it would cease production of GM-branded
cars in Indonesia.
2017: Sells South and East African operations to Japan’s Isuzu Motors and ends sales in
India. I also Sells Opel, Vauxhall and GM Financial’s European operations to PSA Group.
2018: Ceased manufacturing in Vietnam with the sale of operations to Vinfast. Appoints
Vinfast as Chevrolet distributor in Vietnam and licenses small car to the Vietnamese group
to produce and sell under Vinfast brand.
Conclusion
General Motor being the largest American Automobile manufacturer and recently ranked
13th on the Fortune 500 rankings the United States by total revenue, failed miserably in
continuing its business operations in India and other countries as well.
The company didn’t plan and executed the strategies needed for success. Neither did it
analyse its Macro, Industry, Competitors and Firm environment. GM didn’t even plan the
proper exit strategies and didn’t even consider staying back and restructuring everything.
Did the company select the right path? Or it was the opportunity that was missed or being
misused?

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Exhibits
Exhibit I
Sales of total vehicles in the US over the years

Year U.S. sales (vehicles)

1998 4,603,991
1999 5,017,150
2000 4,953,163
2001 4,904,015
2002 4,858,705
2003 4,756,403
2004 4,707,416
2005 4,517,730
2006 4,124,645
2007 3,866,620
2008 2,980,688
2009 2,084,492
2010 2,215,227
2011 2,503,820
2012 2,595,717
2013 2,786,078
2014 2,935,008
2015 3,082,366
2016 3,042,773
2017 3,002,241
2018 2,954,037
2019 2,887,046

Exhibit II
Sale (in units) in 2018 in India

Rank Company Total

1 Maruti Suzuki 1602522
2 Hyundai India 527320
3 M&M 242365
4 Tata Motors 191107
5 Honda cars 178755
6 Toyota 139566
7 Renault 112492
8 Ford India 87587
9 Nissan 53390
10 VW 47796

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Exhibit III
The entry of prominent players in India

Year Company
1905 Fiat Motors
1928 Chevrolet Motors
1942 Hindustan Motors
1944 Premier Auto Limited
1945 Tata Motors
1947 Mahindra Motors
1948 Standard Motors
1974 Sipani Motors
1981 Maruti Udyog
1994 Rover Motors
1994 Mercedes Benz
1995 Ford Motors
1995 Honda SIEL
1995 Reva Electric Car Company
1995 Daewoo Motors
1996 Hyundai Motors
1997 Toyota Kirloskar Motors
1997 Fiat Motors (Re-Entry)
1998 San Motors
1998 Mitsubishi Motors
2001 Skoda Auto
2003 Chevrolet Motors (Re-Entry)

Exhibit IV
Number of total cars produced in India

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Exhibit V
The income statement of GM for the year 2016, 2017 and 2018

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Exhibit VI
Sales of GMI

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