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General Motors investing $1 billion in India

Snapshot: General Motors will inject $1 billion in India in the following years.

The automotive conglomerate wants to transform its Indian operations into a new global export hub to boost sales in emerging markets and this investment is part of a larger $5 billion plan to build a new global family of Chevrolet models in collaboration with SAIC – Shanghai Automotive Industry Corp. Speaking at a briefing in New Delhi, GM’s CEO Mary Barra said the only way General Motors can remain a global leader is to make a significant investment in growing markets such as India.

Over the next five years, General Motors will introduce no less than 10 new models in India which will all be manufactured locally and will help GM reach its objective of doubling market share by the end of the decade compared to 2014 when GM had a 1.8% market share after selling 56,700 units.

GM’s decision to turn India into an export base shouldn’t come as a surprise taking into account Volkswagen and Ford are doing the same thing as they are boosting exports after taking advantage of the low costs with labor and also benefiting from the economies of scale.

By investing a significant amount of money in India, General Motors also wants to take some of the strain from its South Korean operations which have been the company’s low-cost export hub for the past few years as this is the place where GM is conducting almost a fifth of total production.

However, GM's chief of international operations Stefan Jacoby says this massive investment in India will not affect alter South Korea’s export base status as the country will continue to be an important hub for producing and exporting cars for developed and mature markets like Europe and United States as opposed to India where the assembled cars target mostly emerging markets.

As a final note, experts in the car industry are estimating India will become the third biggest passenger market in 2020 after China and United States, so it makes perfect sense that General Motors wants a bigger piece of the action in our country.

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