GM’s India, on 18th May, announced to exit India. As part of a global restructuring exercise, an exit from the Indian market which is the world’s fifth largest by sales.

General Motors, the company behind Chevrolet, has announced to wind up its operations from India. The company entered the Indian market around two decades back, but was never able to gain a considerable chunk of market share. Currently, its share in the Indian market is less than one percent.

Effects of GM’s exit from India :

Job Losses : 7000 job loss have been estimated to reflect as reported by TimesofIndia. While Indirect and Direct job loss may escalate upto 15,000 as reported by the LiveMint

Dealer are in Heavy Loss, Pain & Distraught

GM has over 100 such dealers (120 total outlets) who are clueless about their future and potential losses of thousands of crores, mostly from around 18,000 GM vehicles in stock that will probably not find any buyers now.

GM dealers alleged that  “They kept giving us false assurances whenever we confronted them on the rumours” who asked not to be identified claimed.

“How do they expect us to honour the service commitment when we are incurring such a huge loss?” a third dealer asked, speaking on condition of anonymity.

Dealers start receiving a non-disclosure agreement (NDA) from GM that speaks about the “transition assistance programme” to prepare the dealers for expiration of retailer sales and service agreement on 31 December 2017. Two dealers, including the one cited here, said they would not sign the agreement and instead asked FADA (the Federation of Automobile Dealers Associations) to intervene on their behalf.

If we sign the NDA, then we will not be able to move court even if the company don’t give us suitable or appropriate support. It is not possible to sign any NDA,” says an infuriated dealer from southern India.

GM India spokesperson said that they are meeting dealers individually and working through a plan that addresses their concerns while it fulfills obligations to its customers and discussion are confidential.

Customers got caught between the cross fire

Tanveer Alam, an Indore-based businessman, is worried about the resale value of his Chevrolet Cruze (automatic), a premium sedan, for which he paid Rs17.5 lakh only a month and half ago.

Sumit had bought a Chevrolet Beat, (Chevrolet is the brand that GM had in India) from the money he saved in the last one and a half years of beginning his job to pay a part of the cost for one of his most prized possessions so far. Now he is clueless about what he should do with his car; the biggest fear for him is the looming trouble in the form of service and re-sales value.

Like Alam & Sumit, customers are caught between the toe, company & its dealers.

GM could exit as Suzuki Motors did in Europe.

Mohit Arora, a partner at Singapore-based investment consulting firm, Mondriaan Group, said, “GM should have given a longer runway to its India operations. The transition cannot be so abrupt,” said Arora, citing the instance of Suzuki Motor Corp. which took three years to wind up its operations in Europe.

Source : LiveMint