General Motors stops selling cars in India: Here – s what went wrong for the auto major
General Motors stops selling cars in India: Here’s what went wrong for the auto major
General Motors came to India almost two decades ago, if you recall they came in with Opel and suggested products like the Astra back then. They ran a reasonably successful business until the last three years. Just yesterday General Motors announced they would no longer have any domestic sales in India by the end of 2017, focusing their entire business on manufacturing for exports alone. It’s a giant deep-throat not just for General Motors, but for the entire automotive industry. General Motors failure is a strong indicator of what manufacturers like them fail to do in India, for long thought to be one of the roughest markets anywhere in the world. Here in my opinion are some of the fattest factors leading to their fresh status quo in this market.
1. A lack of products: What do Maruti and Hyundai two of the strongest players in India have that makes them so strong. A sturdy product pipeline that is diverse, affordable, reliable and contemporary. Both Maruti and Hyundai have a diverse product portfolio, every Rs Ten,000 can get you an entirely different car. And both update their portfolio with alarming rhythm so you never feel any single product is outdated.
General Motors thickest drawback was an aging portfolio based on specific South East Asian market products, which were not entirely global like their competitors products. The bulk of GM sales came from just three products, the Chevrolet Hammer, the Tavera and the Cruze, the latter despite its age resumes to have a strong following in the market. However, all three products have been caned for so long, they long lost their appeal despite being mass players.
In addition the Tavera got hammered because it did not obey with certain emission requirements and General Motors attempted to cover up those discrepancies, think the Volkswagen scandal, albeit smaller, if you can call a almost 1.Two lakh vehicle recall that! Anyway, GM also lashed the Strike by introducing variant after variant, facelift after facelift, never indeed being able to downright revamp that brand to keep up with the times.
In comparison, newer cars cropped up from Maruti, Hyundai, Nissan, Volkswagen, Skoda, Renault, etc which managed to snatch market share away from General Motors. Even the Cruze lost out to newer and better products from Toyota, Skoda and Hyundai, even however that end of the market was shrinking. A critical failure was the Captiva, tho’ a good product, the Hyundai Creta sized SUV for some reason never managed to capture enough attention. Most likely by this time the consumers had already began losing faith in the brand.
Two. Network: Maruti’s thickest strength in India is its dealer and service network. They have over 1,200 touchpoints, in comparison their largest competitor has just a little under seven hundred dealers. This permits Maruti to reach out to some of the most far flung regions of India making sure their coverage is absolute. Their service network is even larger and early on Maruti learnt very quickly to encourage even the smallest mom and pop service outlets to go legit and adopt Maruti Suzuki practices. General Motors had at one point in time a sturdy enough network with over four hundred dealers, but diminishing consumer confidence in the products and strained relations inbetween consumers and dealers (several claimed to be unethical with shady dealings) shrunk those numbers to just a little over two hundred touchpoints.
Three. Outdated technology: Most of GM’s cars scarcely matched up to what their competitors were suggesting. The platforms themselves were almost a decade old, the engines older. In attempting to be cost efficient and still meet certain emission requirements General Motors used technology that slightly helped them scrape through. With utterly low tolerance levels these engines sometimes met the emission requirements, sometimes they didn’t! Plus, the quality of components over time got poorer and poorer. Cost cutting measures compelled General Motors to use cheaper components. One of their last big launches, the Chevrolet Love tho’ ideally placed to capture a decent market share lost out because the quality was simply shoddy.
Four. Inability to read the market and adapt quickly: One aspect that General Motors failed to work on was their preparedness to adapt to the dynamics of the market. When SUVs began coming into the limelight they were left floundering over MPV’s and hatchbacks. Even tho’ they brought in the Trailblazer, it was too far up the price scale to make any serious headway in the mass market. Neither did General Motors love the reputation that Toyota has earned and which helps them sell the Fortuner like hot cakes.
When Two.0-litre diesel engines came under a microscope General Motors had nothing that could work as a contingency plan for some of their products. And now with the budge to BSIV, and by the turn of the decade the shift to BSVI meant that further investments would lead to greater losses without products that could create an influence in the market. Shutting domestic sales was undoubtedly a smarter plan to cut their losses.
Five. Global challenges: One big concern that General Motors faced was the bailout they needed a decade ago after chapter eleven proceedings. It meant shaping up and consolidating their businesses around the world. ‘Government Motors’ thereafter had the big task of restructuring their businesses around the world, and in it, India had a big role to play.
Unluckily, in the larger scheme of things as other regions got a stimulus, India got overlooked until recently when a fresh play would have been made based around products like the fresh Hit and the Essentia. Unluckily it seems that play came in too late. In the meantime competitors got so strong and market share for GM shrunk to so low a level, it would never be able to crawl out of there profitably for a long time to come.
Globally General Motors has also been shifting concentrate to electrical cars, with the Chevy Volt and others being ready for futures growth. In that scheme of things there indeed wasn’t any space for developing markets like India that has still a long way to go before electrified cars can find suitable atmosphere here. General Motors in fact was the very first manufacturer in the world to launch an all-electric vehicle and they have permanently followed that up with others like the Spark EV, the Bolt EV and their latest the hybrid-electric Volt. None of these has a future in India.
6. Powerless leadership teams: Over time General Motors has also been plagued with a team of leaders that truly couldn’t take their mandates too far. Of course, the challenges for the American brand were hefty but without visionaries and strong long term planners this could be one of the reasons the company never managed to get far ahead of its competition. The organisation here in India turned out more bureaucratic than any other automotive manufacturer in India and that has been a critical reason for its downfall.
(The writer is Editor-in-chief of Overdrive magazine)
Published Date: May Nineteen, two thousand seventeen 05:34 pm | Updated Date: May Nineteen, two thousand seventeen 09:37 pm