General Motors India Ltd., is a joint venture between the world famous General Motors of USA and Hindustan Motors of India. `What is good for General Motors is good for America' is a popular age old saying in USA. How is the company's Indian subsidiary performing? What are the difficulties it faces in a relatively foreign terrain? Let us see.The company has shut down its plant operations for three weeks upto February 6 in order to complete the work on its business unit scheme at Halol. But there are market grapevines saying that the shutdown was mainly for clearing the unsold stock of Opel Astra cars of the company lying at its plant site. As the Indian automobile market is facing an acute slowdown if not actual recession now, the company finds it extremely difficult to clear the inventory.
As a part of its marketing strategy, the company has started an `Opel Club' in which all the buyers of the Opel Astra cars are automatically made members. In addition, selected corporate members are also made members.Buyers of the car in turn can avail discounts or special gifts from the corporate member establishments. So far, 34 corporate members have filled the club. The company is also planning import of completely built units of its other range of cars to India on behalf of its dealers in order to save loads of paperwork. Demand for other cars is less than 100 each year and do not matter much anyway.
The company has formed a financial services subsidiary jointly with 20th Century Finance. 20th Century Finance will transfer its car finance portfolio assets in favour of the new finance company. General Motors alongwith its another financial subsidiary GMAC Financial Services holds 51 per cent majority stake in the new company. The joint venture was formed in October 1997.
Depreciation of Indian rupee against the dollar has taken a toll in the cost of the cars. The company has raised the price of its Opel Astra cars by Rs 11,500 because of the increase in the cost of imports.Consequently, the ex-factory price of theonly model Opel Astra car has increased from Rs 6.74 lakhs to Rs 6.85 lakhs. In Madras city, the ex-dealer price has increased to Rs 7.83 lakhs. The car has an indigenisation level of 50 per cent and the balance is imported in the form of knocked down kits. In the first half of the current year 1997-98, sales of Opel Astra cars averaged around 900 per month. But in the month of November, the figure has drastically dropped to 350 vehicles due to poor market conditions. Dealers are offering discount to the car of around Rs 10000 to Rs 25000. Even the company may slash the price of the car at a later date if the offtake does not improve.
The company is planning to launch the automatic transmission variant of the Opel Astra car in April this year and the price of the car will be Rs 60,000 more than the current model. It will have four drives levels. The mileage of the new car will be 10 per cent lesser than the current model. In June, the company is planning to launch the diesel version of the car in which a1800 cc turbo charged 69 bhp engine will be fitted.
The company has launched automotive components for the passenger cars in India through another subsidiary of its American parent Delphi Auto Systems. The American parent is also interested in telecommunications and the defence market as part of its expansion plans in India. The automotive components subsidiary will cater not only to the requirements of General Motors India Ltd., but will also sell its products to other Indian car companies. The maiden launch of the company was in front axles for Maruti. In fact the parent American company sees much more opportunity in telecom.
The company knows that it can't have a major presence in the Indian passenger car market with just one car and one model. Therefore it is planning to introduce its small car model Opel Corsa and a bigger car Opel Vectra. In the long run, the company may also be introducing utility vehicles and trucks in India to have a bigger share of the market. Since its launch in June 1996, thecompany has sold 14,000 Opel Astra cars in India manufactured at its Baroda plant in Gujarat. Last time the company announced that it was designing a new small car for the Indian market and named the car as `Gama'. At present it is not known at what stage this project stands.
Afterall, 80 per cent of Indian passenger cars market is dominated by small cars and that is why Maruti with its monopolistic position is an outstanding success.The company wants to capture 10 per cent of the market share by the turn of the century.For this, it will require its parent company's help a great deal. The parent company posted a 10 per cent higher sales in the month of December 1997 to 3,91,047 vehicles. Sale of trucks was up 13 per cent and cars by 7 per cent. For the year 1997 as a whole, the company's sales dropped by 0.3 per cent to 47,13,247 vehicles. With this stable position, it can perhaps concentrate more on the Indian turf though by world standards, there is nothing much in the Indian turf for the multi-billiondollar company to bank upon. Unless and otherwise it contemplates introducing a small car for the Indian market soon.
