GMI’s shrinking market share and capacity utilization caught the attention of parent company CEO Mary Barra, who visited India in September to assess the affiliate’s options. She conceded GM did not have the right focus.
The automaker’s small-car offerings were not competitively priced owing to a low level of parts localization and the need to import relatively costly components, exacerbated by the depreciation of the Indian rupee against the U.S. dollar.
The automaker’s 10 brands combined claim 21.6% of the local market, second only to Maruti Suzuki, and it is India’s leading exporter with a 40% share of sales. It is utilizing nearly all of its annual 640,000-unit capacity.
Chinese components are priced so low that Indian manufacturers are seeking anti-dumping duties. But India also has a free-trade agreement with the ASEAN trade bloc that allows duty-free imports of parts made in those countries.
Delaying the plant will allow Maruti Suzuki to draw on its cash reserves and invest in marketing and sales, expanding the sales network and ‟making the right models,” Bhargava said during the automaker’s September general meeting.
Just 35% of the light-vehicle market in 2007, diesel’s share peaked at 58% in 2013. Diesels’ current share is 53% but that is expected to come down to 35% by the year 2016, turning a full circle over a decade’s time.
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