General Motors exits India: 10 key things to know

Key highlights:

• GM to layoff 400 employees in India
• GM exits due to continued operational losses in India
• It's Talegaon plant increase production for exports

US car maker General Motors (GM) on Thursday announced that it will stop selling cars in India by the end of 2017. 

GM which operates through its Chevrolet brand India will discontinue its domestic sales operations by the end of 2017, but will continue its exports operations.

Kaher Kazim, MD and President of GM India explained the reasons for them to pull out of the Indian market and also made several announcements in a conference call held for the media.

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Here are 10 key things that you need to know about GM's exit in India:

1. Layoffs: The decision for them to stop domestic sales operations in India would mean that 400 GM employees would lose their jobs. This would mainly consist of its operations staff at its office in Delhi. This accounts for 8% of GM's employees in the country. The company said there will be long separation process and that the employees will receive a generous compensation package. However, it did not mention the compensation that they will receive. Some GM employees will be retained to help with the after sales service.

2. GM's Talegaon facility: GM's Talegaon facility will continue to operate and will serve as facility to manufacture cars for its export market. The company said they will increase the production at the facility and while exports make up 90% of its production now it will be 100%. The around 2,500 employees at the Talegaon plant will be retained.

3. GM's Bangalore Technology centre: The company's Technology centre in Bengaluru will continue to operate, said the company. The about 2,500 employees in the company will retain their jobs.

4. Goodbye for good: Kazim said that GM will not come back to India again. When questioned about whether they plan to bring any other GM brand into India later, he said that they do plan to enter the Indian domestic market again. “We don't have any other GM brand which will enter the domestic market,” said Kazim.

5. Dealerships: The company is in talks with dealerships regarding their exit and the transition process. They said that they will provide support to all their stakeholders such as vendors and dealers in the coming months. GM currently has 150 dealerships in India. They however did not mention any details of a compensation to dealerships.

6. Exports driven: The company is looking at using its Indian manufacturing facility to service its export markets. It said that its had exported around 70,000 cars to markets such as Mexico and South America. The new cars which they were expected to launch in India such as the new Beat will only be produced for export markets.

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7. Losses in India market: While Kazim did not give any details regarding the losses GM has made in the domestic market in India, he said that domestic business was incurring heavy losses. He further said that increasing investment in the Indian market would not give returns such as leadership position or rise in market share and hence the decision was taken.

8. After sales service: The company said that it will honor all its after sales agreements such as warranties with its customers. It said that despite it stopping domestic sales from December 31, 2017, it will continue to provide after sales service to its customers. It said that even spare parts of its models will be made available in the market after it stops domestic production.

9. Global decision: The company says that this was a decision that was taken on GM global level keeping its Indian subdivision in loop. The review of the Indian operations had begun in 2016 itself. GM's performance worldwide was the thought that went behind taking the decision, said Kazim. “It was a tough but necessary decision,” he added.

10. Trump Administration: The company denied that the decision had anything to do with the current US government pushing automobile companies in the US to create more American jobs. “This is a business decision and not related to any policy decisions by any government,” said KaziM.