Ever since the bankruptcy report broke out, we have been receiving thousand of mails from customers across India doubting the future of GM India. We believe its necessary to clarify the things here. The matiz owners who burnt their hands when the Daewoo went bankrupt know the pain. Coming back to the GM story, there are two thing you must know
* GM India is not filed under US bankruptcy filing
* GM (the parent company) will no longer fund the Indian or any overseas operations.
Future of GM India?
While the first one is a good news for anxious customers, the second is certainly not. But we thank GM India to take account of the situation and responding swiftly with banners saying ‘There for you, There for India’. “We are committed to ensuring that our customers continue to receive a top-notch sales, service, spare parts and warranty coverage experience. Our dealers will also continue to receive all our carlines, while our suppliers will continue to work with us to supply parts and components,” said Mr Karl Slym, President and Managing Director, GM India. GM India also reiterates that its plans are intact and it will launch its Cruze brand and a mini-car on schedule; and that the automobile company plans to have 250 sales and service outlets in India by the end of 2009.
But will the GM Indian operations will be as usual as it was in the past. Seems like not. GM India which has proposed to build a power train plant in Maharashtra at an investment of $200 million is now finding it difficult to raise money. Though GM’s subsidiary is a profitable unit unlike its global counterparts, the profit is very modest. GM sold only 53,719 units in FY08-09. According to Mr Nick Reilly, General Motors Group’s Vice-President and President for Asia-Pacific even the working capital for the GM India needs to be raised and even that has been difficult as of now. “Working capital can be collateralised with receivables and inventories and is usually relatively easy to raise. But even this has been a little difficult the past few months,” he said. Also he admitted that the sales in the first four months have declined because of “customer perceptions” about the fate of the parent company’s future. “The market has been quite weak and our competitors, Maruti Suzuki and Hyundai Motor India, have been very aggressive in terms of market incentives, but we can’t match them,” he added.
Outcome of the GM bankruptcy
The resale value of GM products which is already at bad state (blame the massive discount offers) may hit an all time low.
GM global operations
GM the struggling auto giant was the top auto maker till recent times and when hit by economic meltdown badly. Resulting the automakers to rely on taxpayers money to run. GM was critcized for developing gas guzzlers like Hummer when its peers ran behind fuel efficient hybrids. GM has lost $88 billion since 2005 is in the process of cutting debt, workers and selling non-profitable brands. The opel unit is already sold to Magna and Hummer went to a chinese auto maker. Saab and Saturn will also be sold. Fiat is said to be keen on buying GM’s south american operations. The new GM might be built around the Chevrolet, Cadillac, GMC and Buick brand. But US Federal Governement would make the final call.
