Why General Motors, India was not

successful in Indian Automobile

Market ?

Project Case Study

Sumit Verma

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 1
 General Motors, India- Case Study
The rise and fall in Indian Market

In 2003, introduced one of other brand

“Chevrolet” in India with moderate
success.

In 1999, took over the complete In 2009, sold 50% stake to

ownership of JV from Hindustan Shanghai Automotive , China
Motors and set-up General and launched successful Chinese car
Motors, India as independent models under GMSAIC which did not
entity do well in market

Started producing mid size cars In 2012, after financial recovery, repurchased
under brand name “Opel” which it’s stake and took several measures to
could not impress Indian revamp it’s market position by opening
customers design centres and launching models in
India.

First global automaker to enter In 2017, under Global restructuring

India after liberalization in 1990’s pressure, GM announced it’s exit from
with a joint venture set-up along Market India by which time it had
with Hindustan Motors already exited from 5 other countries

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 2
 General Motors, India- Case Study
General Motors : Brief Introduction
Company General Motor Company

Founded/Founder September 16, 1908/ William C. Durant

Business Area Automotive, Finance

Current CEO Mary T. Barra

Geographic areas served Worldwide (more than 125 countries)

Headquarters Detroit, Michigan, United States

Revenue (USD) $145.588 billion (2017)

Profit (USD) $10.016 billion (2017)

Employees 180,000 (2017)

Oldsmobile/SAAB
Chevrolet, Buick, GMC, Cadillac, Wuling,
Vauxhall/Opel
Brands Jiefang, Holden, Baojun Pontiac/Saturn
Maven (Car Sharing), Onstar (Car Safety) Hummer

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 3
 General Motors, India- Case Study
GM, India : History and Background
 General Motors initiated its operations in India in the year 1928, but in 1954, the
corporation closed down its assembly operations due to government policy.

 GMIPL was created as a joint venture in 1994. Hindustan Motors shared equal
percentage of ownership along with General Motors, to manufacture and sell Opel
branded automobiles.

 Till 2003, GMIPL continued manufacturing Opel cars at the Halol facility in Gujarat and
then it switched to producing Chevrolet cars.

 In 2003, the company launched its technical centre in Bangalore. The technical center
included research and development facilities, vehicle engineering activities. The
technical centre also provided purchasing and financial support services for smooth
operations of General Motor offices outside India.

 A second vehicle manufacturing plant was set up in Talegaon in 2006, which started
producing vehicles of the brand Chevrolet in September 2008.

 General Motors in 2009, General Motors declared a new 50-50 partnership with
Shanghai Automotive Industry Corporation of China, the partner of GM's main venture
in China for carrying out its operations in India
Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 4
 General Motors, India- Case Study
General Motors India: Plant & Offices

Technical Centre Plant 2

Plant 1

Location Halol (Gujarat) Bangalore (Karnataka) Talegaon (Maharastra)

From 1994 2003 2006

Activity Manufacturing Tech. Centre/ Manufacturing

Global Purchase/
Financial Centre/
Capacity 130,000 cars/year Digital vehicle Design Studio 220,000 Cars/year

Models Opel Astra (1996)

Opel Corsa (2000)
Opel Vectra (2003)
Corsa Swing (2003)
Corsa Sail (2003)

Market India India, Mexico,

Latin American Countries

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 5
 General Motors, India- Case Study
External Events & impact on GM, India

2009-10 2011-12 2013-14 2014-15

• Global financial Crisis • GM Turnaround • Emission controversy • GM Board visit to India

• •
GM filed for bankruptcy GM bought share • Largest vehicle recall • Halol Plant for Sale
protection from SAIC and gained in India
93% control on GMI • Mary Barra (CEO)
• Sell-off GM brands • Adverse impact on announced $ 1 bn
(outside India) • SAIL-UVA, Sedan, Enjoy company’s brand image In India
(SAIC successful models
• Formation of GMSIL in China) were introduced • Top executives fired • Plan to launch
with 50:50 JV in India 10 new models from
between GM low cost emerging market
and SAIC (China) platform

• GMSIL launched new

Models for local
& export

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 6
 General Motors, India- Case Study
ndian Market Overview

3,500 Passenger Car Sales, India (`000 Units) 3,288 Passenger cars segmentation-2017
3,048
3,000 2,665
2,789
2,618 2,601
2,502 2,504
2,500
CAGR ~ 7%
2,000
1,951 7%1% Small Cars (A00),
1,550 1,553 Price < 10 Lacs
1,500 Compact Cars (A0),
U
n
it
0
0
0

s
`

1,000 Price 10-15 Lacs

500 48% A Segment
0 45% B,C,D Segment
FY FY FY FY FY FY FY FY FY FY FY
2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
08 09 10 11 12 13 14 15 16 17 18

Price range (Small & Compact cars) Passenger Car Market Share, India -2017
1600000
Creta 1.3 3.3
1400000 2.91.5
Ciaz 3.7
1200000 Maruti Hyndai
Tavera 4.5
1000000 Mahindra Honda
5.5
INR

800000 Tata Toyota

47.1 Renault Ford
600000 5.8
VW Datsun
400000
Eon Beat 7.2 GM Others
200000 Alto-800

0 17.2
Maruti Hyundai GM

Growing car market/small car dominance/Price sensitive/Asian OEM’s

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 General Motors, India- Case Study
GM Portfolio in India Chevrolet Forester

Chevrolet Optra

Opel Corsa sail

Optra SRV
Opel Corsa swing

Opel Corsa Aveo-UVA

Opel Astra Opel Vectra Tavera

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
“OPEL Brand

Cruze Enjoy

Spark Captiva Aveo Beat SAIL-UVA SAIL Trailblazer

2007 2008 2009 2010 2011 2012 2013 2014 2015

“CHEVROLET Brand

No
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 General Motors, India- Case Study

4/3/21 GM – Passenger Car Sales (In Numbers) 4/3/21 4/3/21

4/3/21

4/3/21

4/3/21
4/3/21

4/3/21

4/3/21

4/3/21

4/3/21

4/3/21

4/3/21

4/3/21
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

4/3/21 4/3/21 4/3/21 4/3/21

4/3/21 4/3/21 4/3/21 4/3/21
4/3/21 4/3/21 4/3/21

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 General Motors, India- Case Study
Market share (%) 2016 Outlook Portfolio
Maruti (incorp. 1982)

43.08 44.31 44.9 47.1

37.4 41.52

2012 2013 2014 2015 2016 2017 Dealers: 1800

Hyundai (incorp. 1996)

18.37 18.02
17.26 17.2
16.35
15.6

2012 2013 2014 2015 2016 2017 Dealers: 475

GM/Chevrolet (incorp. 1994)

Beat SAIL-UVA SAIL Tavera Cruze

3.7 3.06 2.01 1.21 0.84 0.2

2012 2013 2014 2015 2016 2017
Dealers: 150
Trailblazer

Continuous decline in market share for GM, India from 2012

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 General Motors, India- Case Study
GM, India Profit & Loss over years
Financial Year

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

250
0
-250
-500
-750
Million India Rupees (INR)

-1000
-1250
-1500
-1750
-2000
-2250
-2500
-2750
-3000
-3250
-3500
-3750
-4000

Source: http://www.mca.gov.in

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 General Motors, India- Case Study
Strategic Choice : Global or Profitable
Under the new leadership of it’s CEO, Ms. Marr Barra, General Motors made following
Strategic choices

 Profitability over volume targets

 Sustainability through future technology (Electrification and Autonomous Driving)

Pursuing their strategic choice, GM matched it’s performance to it’s internal capabilities
rather than market forces beyond control and decided to close loss making businesses not
aligned with global strategy.

• Exit from Russian, European and South African market.

• Closed production plants in Indonesia and Thailand
• Sold of “Opel” and “Vauxhall” brand to French OEM PSA Group

The savings being used to finance the electrification and other future technology in
promising markets like U.S and China.

With no viable solution in sight for India, GM decided to exit the market
Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 12
 General Motors (GM) exit from Indian market
Strategic Choice : Global or Profitable
hort Tenures of Leadership

2005 2006 2007 Aditya Viz

2007 2008 2009 2010 2011 Karl Slym

2011 2012 2013 Lowell Paddock

2013 2014 2015 Arvind Kumar Saxena

2013 2014 2015

Kaher Kazem

2016 2017 2018 .... Sanjay Gupta

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 13
 General Motors, India- Case Study
Key Strategic failures • Nine CEO’s in 21 years
• Resulted in lack of sustained long term strategy

Frequent
• Stuck with MPV/HB when
changes in • Price range from 3 lakhs to 30 lakhs
SUV was trend leadership
• Trailblazer was expensive Inability to Lack of Product
read the strategy
market and
adapt
quickly
Why GM failed in Indian Failure to
Financial market implement
Crisis of 2008 global
and it’s ripple platform
effect strategy
Lack of • Failure to implement emerging
• Sold 50% Stake to SAIC
Frequent consistency in
Market platform planned for
India, Mexico, Brazil & China
launches and brand
withdrawals strategy
• “Opel” Brand replaced by Chevrolet
• Use of Chinese Models under
• 20 Models , 10 were withdraen Chevrolet Brand damaged it’s image
• “Beat” finished “Spark”/“SAIL” finished “Beat”

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 General Motors (GM) exit from Indian market
Strategic Choice : Global or Profitable

Other factors

 Consistent Leadership over time matters

 Local autonomy

 India specific strategy and product road map

 GM Export Markets

 Strategy : Technology Choice

Saturday, April 03, 2021 (Shishir/Anuj/Aman) APSM 11th Batch, IIM, Calcutta 15