Motors India has completed 14 years of operation in India. GM India started its
journey in 1996 and now offers products under the Chevrolet brand, which was
introduced in India in 2003. Chevrolet
had already emerged as one of the fastest growing automotive nameplates in
India. GM India produces the Chevrolet Captiva, Chevrolet Optra, Chevrolet
Cruze, Chevrolet Aveo, Chevrolet Aveo U-VA, Chevrolet Spark, Chevrolet Beat and
Chevrolet Tavera for sale in India and operates state-of-the-art manufacturing
facilities in Halol, Gujarat and in Talegaon, Maharashtra.
General Motors India’s
Halol plant will soon be seeing a lot of action with manufacturing of light
commercial vehicles. How are things progressing there?
The Halol plant is the mother plant of the company. It started operations in July 1996 and the
first car to be rolled out was the Opel Astra. That time the capacity of the
plant was 12,000 units per annum. The capacity was gradually raised to 25,000
units, then to 60,000 and now we have gone to 85,000 units per annum. Now it is
further getting expanded. The light commercial vehicles are to be rolled out
from this plant. That means the capacity is going beyond 100,000 units per
annum and the expansion work is in progress.
At the Talegaon plant
we have a capacity of 140,000 units per annum. We commissioned the plant in
September 2008. The Beat comes out from this plant. The engine plant has also
come up in Talegaon. The capacity of the engine plant is 160,000 units and
there is a provision to expand it by another 140,000 units. That means Talegaon
itself can produce 300,000 units of cars and also 300,000 engines. As of today
both the plants put together have a capacity of 2,25,000 units. We have already
announced that in a time frame of two years we are planning to roll out six new
vehicles. We will have at least three or four models of light commercial vehicles. We are looking at
a van which will come out at the end of this year. We are also looking at
introducing a pick up like the Tata Ace. In addition to this we are also
looking at coming out with a utility vehicle. So the work in is in progress.
There is also a hatchback and a sedan coming.
With regard to your LCVs,
have you decided on the engines and the other critical components?
As for the engines, we are in talks with our vendors. We
should be able to close this pretty soon. The manufacturing experts are already
in and they are in our plants and our offices. We are on the right track and if
everything goes well our plan is to launch the first product under the joint
venture by the end of this year. All these vehicles are going to be
manufactured at our plants and the parts are going to be sourced also from
India. In our case it is going the other way round. Normally, Chinese companies
are manufacturing products and exporting to other countries. Here in our case
it is happening in India. We might even look at exporting from here. All these
parts are going to be locally sourced. We have already placed the orders with
the vendors here and these are going to be manufactured at our plant. If we
cannot produce a quality product, then who else would?
India is a very price
sensitive market. If your product is stylish, performance-wise it is good and
if it is fuel efficient it will sell and even today we are the fifth largest
automobile manufacturer in India. We have come a long way. Once upon a time we
used to sell 2,500 cars a year. Last year we crossed 100,000 units. While the
industry grew by 31 per cent, we registered a growth of 59 per cent. The market
is tough as of now. The Reserve Bank of India has again increased the repo and
reverse repo rates which mean that the commercial banks have already announced
increase in interest rates. We do not expect the market to perform like the way
it did last year. But I think we will still be able to record double digit
growth this year too.
Will the LCVs also carry
the Chevy brand name?
Yes, for light commercial vehicles there could be a brand
extension of Chevy. It is definitely going to be under the Chevy brand.
You recently unveiled an
indigenously developed Smartech engine. Are more such engines in the pipeline?
We have commissioned our engine plant only in November
2010. The MoU was signed with the Maharashtra government only in August
2008. In record time we got our engine
plant commissioned. The Smartech engine which we launched recently is the one
that is being put in the Beat LPG. The engine is getting rolled out from the
Talegaon plant. First and foremost, this engine has been created at GM Technical
Centre (GMTC) in Bangalore. The technical centre is a combination of
engineering, R&D and design centre. In fact, the engine has been developed
keeping in mind the local driving conditions and the quality of fuel in the
country. Therefore we are quite confident that this engine will do a good job.
More aluminium alloys have been used and hence it is lighter, is more fuel
efficient and has a lot more attributes as well.
Tell us a bit more about
the GM technical centre and the role it plays vis a vis the company’s global
centre caters to local, regional and global procurement. The technical centre
is a 100 per cent export oriented unit of General Motors Corporation. I am on
the board of GMTC. The automatic transmission of the Cruze has been developed
majorly at this centre. In fact GMTC contributed more than 80 per cent of this.
As for the design centre we have around 70 people working there at the centre.
What about GM bringing in
other brands besides Chevrolet?
The CBU duty is around 60 per cent. We want that duty to
remain as well. If we reduce this CBU duty, India will become an import market.
We have all invested a sizeable amount of money as far as our operations are
concerned. If I look at any CBU programme, I should have the volume. Sooner or
later if I go for an SKD or CKD operation I shall not be able to justify my
investment if I do not have volumes. We are not looking at any CBU programme as
of now. We have one CBU today, that is the Captiva. This vehicle is imported
from GM Korea but at the same time we get the engineering validation done here.
This validation is done by our engineers in Bangalore, Talegaon and Halol. We
have showcased cars like the Camaro but that is all part of our brand building
What is your current
market share in the passenger vehicle
If you look at our overall market share it is around 4
per cent. But we have not been operating in all the segments. Even today 82 per
cent of the total passenger vehicle market comprises mini or compact cars. We
only managed to get an entry into this segment with the Spark. This was about
two years back. But in two years time crossing one lakh mark and registering a
growth of 59 per cent is a good achievement. We are going exceedingly well and
we are on the right track. As far as the Cruze is concerned, it is the market
leader there. It is a segment leader. When we launched the Cruze we told
journalists that our intention is to sell 500 units a month. On an average we
are selling more than 700 units a month. Also in the used car market we have 60
outlets for the Chevy OK used car programme. Last year, we set a target of
2,400 units and have already sold more than 4,000 units. It’s an amazing
Did the launch of the
Toyota Etios ruffle feathers at GM especially with its pricing?
This is one of the fastest growing markets in the world
as of now after China. Everybody has got space. This is a very price sensitive
market and if you have the right product at the right price and if you are able
to provide the best of services, I do not think you are going to lag behind.
You can definitely succeed in the market. The market is growing for various
reasons. Lifestyles have changed, household incomes have gone up, easy
financing options, and the availability of different options, all of these
attribute to the growth of the market. It is not going to be limited to a Nano
or an Alto or an Etios. As far as the Etios is concerned, I do not find it as a
competition. We are doing exceedingly well as far as our products are
concerned. All the OEMs have their own space in the market.
Are tier-II cities
contributing to your increasing sales?
There was a time in earlier days a company’s 60 per cent
car sales used to come from metro cities. Now the trend has completely changed.
Around 60 per cent of sales now come from non-metros while metros contribute 40
per cent of total sales. Among the major metros we have Delhi, Mumbai, Kolkata
and Chennai. In the next category we have Bangalore, Lucknow, Hyderabad,
Ahmedabad, Pune etc. Then there is another category that includes places like
Jaipur, Guwahati, Kanpur etc. In 2008 we used to have around 70 dealers across
the country. As we speak we have now 239 sales point and 235 authorised service
outlets. That means we are already covered in more than 135 cities. The
government is also planning to open banks in unbanked areas that cover around
72,000 villages and that too by 2012. That means the rural market too has got a
tremendous potential. In our case we have started a number of activities to
generate volumes in the non-metros. For example, if I have a dealer in Meerut,
then I shall ask him to conduct a road show in Hapur. The markets are looking
quite good in non-metros now.
Will the LCVs be sold
through separate dealerships by General Motors?
We have already set up a division to develop our
dealerships for our LCVs. It’s going to be completely separate. But again, for
example, if I have a car dealer in Hyderabad and if he is able to give me a
dedicated facility for my LCVs and he has the experience and the drive, then we
would definitely look at it.
You had recently announced
GM sourcing engines from Sonalika for the Tavera. What is the status?
That we have already announced. It is on and that engine
is for the Tavera. We have already signed the agreement and they are on the job
and we intend to launch the Tavera with the Bharat Stage-IV engine by June-July this year. The engine
will come with some changes and will be manufactured in Hoshiarpur by Sonalika.
India has a Comprehensive
Economic Partnership Agreement with South Korea. GM has a plant in South Korea
through the purchase of the erstwhile Daewoo plant. Now will the company be
leveraging all this to its advantage?
As of today, India has got Free Trade Agreements (FTA)
and Preferential Trade Agreements with 21 countries. In all these FTAs the
automotive items have been kept in the negative list. But in the case of
Thailand they have introduced something called the ‘Early Harvest Scheme’. They
have identified certain products and duties on them would come down in a phased
manner. For us it does not matter any way because we have high localisation
content for our cars. For the Tavera it is 99 per cent. Even today the Bharat
Stage-III engines are sourced from Avtec in Indore. We have invested more than
US 1 billion in two of our car plants here in India. We have the GM Technical
Centre and are employing close to 4,500 people.
Is it fair to say that GM
started its innings in India with the wrong products?
When we entered India in 1994, we had to do so with a
local partner as per the then prevailing automotive policy. The automatic
approval route only came about in 2002. So when we came into India we tied up
with Hindustan Motors. They were our 50 per cent partners. So you cannot say we
made a mistake. They happened to be GM Corporation dealers around the time
India became independent. It is not fair to say that we entered the market with
a wrong product. It is not correct. In fact the Opel Astra did generate the
numbers while Ford which launched the Escort, disappeared in no time. But the
Astra continued to be bought by Indians. We became a 100 per cent subsidiary in
1999. That was the time we introduced the Opel Corsa. Let me also explain that
when you are a 50 per cent partner and you want to introduce a product I may
not be able to do it till my partner gives me concurrence. In 2003 we
introduced the Chevrolet brand of cars. When we did this, we also got the
Subaru product Forester. It also had its own run though it was a CBU programme.
That was the first Chevy brand and later we introduced the Optra. Now Chevrolet
is the fastest growing name plate in India. If you look at the brand score it
is 26 now--A brand that was introduced only 2003 is now a force to be reckoned