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Old 05-13-2007, 03:43 AM   #1
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GM makes its big push into car-hungry India

GM makes its big push into car-hungry India
May 13, 2007

BY JEWEL GOPWANI

FREE PRESS BUSINESS WRITER

MUMBAI, India -- A tiny car has never meant so much to General Motors Corp.

Hitting dealerships in India this month is the Chevrolet Spark, a car that's smaller than the Chevy Aveo and important enough to draw GM Chief Executive Officer Rick Wagoner to the other side of the world for its launch last month.

The Spark is the reason GM expects to nearly double its sales in India this year.

It's the company's biggest stride in a race to win over drivers in the world's second-fastest growing economy, where new jobs and low interest rates have created generations of new car buyers.

GM and seven other automakers plan to invest nearly $4 billion in India. The investments would double the number of cars produced in the country to nearly 3 million in the next decade.

The country's passenger vehicle sales grew 27% to 1.4 million vehicles last year. Those sales are expected to grow to 2 million by 2010 and to 3 million by 2015.

India's car market is critical to GM as it continues to lose money in North America and duels with Toyota Motor Corp. to be the world's largest automaker.

With the Spark, GM meets the competition on size and price. The sticker price on a Spark starts at 309,000 rupees, or about $7,500. GM expects to sell as many as 2,500 a month and drive its market share from less than 2% last year to 10% by 2010.

"GM has made growth in India a priority," Wagoner said.

GM's investment

This month, GM makes its biggest effort to make up for lost time in India.

After 10 years of selling sedans and sport-utility vehicles there, it wasn't until last year that GM offered a vehicle that even approaches the size of what most Indian car buyers prefer.

GM started in March 2006 with the Chevy Aveo sedan, which is small by American standards but considered midsize in India. In December it launched the hatchback version. This month, GM delivers the Spark to its dealers.

"They're at least getting their product strategy right," said Mohit Arora, director of J.D. Power Asia Pacific.

GM expected to launch the Spark two years ago using an old Daewoo plant near Delhi after buying the bankrupt South Korean automaker's assets in 2002. But GM hit roadblocks on negotiations involving labor, customs and tax issues.

"It was not an intentional delay," said Rajeev Chaba, managing director of GM India. "We moved very fast once we were clear that we would not get the old plant."

GM's next move is to build a $300-million plant to make 140,000 vehicles a year by the end of 2008, bringing its capacity to 225,000 vehicles a year. GM plans to add 24 dealers for a total of 115 in India and 28 more service centers, for 122 in the country.

The Spark puts GM ahead of Volkswagen AG, Toyota and Honda Motor Co., all of which plan small cars for India. The model also heats up GM's rivalry with Ford Motor Co. in India. Last year, Ford doubled its sales to 42,060 vehicles in India. GM plans to do the same this year as it expects to increase sales from 35,823 last year to 66,000.

Now GM is gaining on India's market leaders, which have their own plans for growth.

Maruti Suzuki, controlled by Suzuki Motor Corp., has half of India's car market and three of the country's top five vehicles. Now building 800,000 cars a year, Maruti Suzuki is ramping up to build 1 million a year in two years.

Tata Motors, the country's third-largest automaker, is preparing to launch what promises to be the country's cheapest car. The $2,400 vehicle is targeted at scooter riders who want to move up to four wheels.

That's a solid strategy, said Ashvin Chotai, the London-based director of Asian automotive research at Global Insight.

A quarter of new car buyers, accounting for 300,000 car purchases, are upgrading from scooters, J.D. Power said. Last year, Indians bought 7.8 million two-wheelers, more than five times the number of cars sold.

"There's a huge potential there," Chotai said.

What customers want

When Jagjeet Singh Makkad decided to buy a new car, the 44-year-old husband and father of two picked a Hyundai Santro, a tiny four-seater that is easy to park.

But what put the Santro over the top for Makkad, who calls himself a sardarji -- a Sikh man who wears a turban -- was the car's raised roof, which is at least three inches taller than most of India's minicars.

Pointing to his maroon turban, Makkad said: "For a sardarji, it's very good height-wise."

When Makkad was looking for a small, yet tall, vehicle four years ago, GM didn't offer anything close.

But with the Spark, the automaker can tap into the buying power of India's growing middle class, which accounts for about 50 million people, or 5% of India's population, and is expected to grow to 583 million or 41% of the population by 2025, McKinsey & Co. reports.

Brand and reputation

GM is still an unknown to India's younger generations.

The company suffers, on a smaller scale, from brand recognition challenges similar to those it has in the United States. In India it offers Opel and Chevy vehicles.

"You go worldwide, Honda is Honda," said Mayank Merchant, executive director of the National Garage GM dealership in central Mumbai. "Sometimes people get confused. What is GM? What is Opel? What is Chevrolet?"

It doesn't help that rival Toyota, which is hardly even a player in the Indian market, enjoys a sterling reputation: Its plain-vanilla Camry is considered on par with the Mercedes-Benz E-class.

But GM is focusing its attention in India on Chevy, a once all-American brand that has gone global, scoring huge gains in China, Eastern Europe and other developing markets.

"Our challenge right now is that Chevy becomes the most aspiring brand," Chaba said. "We are moving in the right direction."

GM's global presence has helped it make inroads with older buyers.

Manorama Limdi chose a Chevy as her anniversary gift in December because her husband, Kakubhai, has high regard for the brand.

"My husband has used Chevrolet cars way back in the 1960s when he was in the U.S.A.," said Limdi, 68, whose husband practiced medicine on Staten Island, N.Y., almost 50 years ago. "It's a renowned make."

Contact JEWEL GOPWANI at 313-223-4550 or jgopwani@freepress.com.

General Motors Corp. Chairman Rick Wagoner launches the Chevrolet Spark in New Delhi, India, last month. It has a 4-cylinder, 1.0-liter engine and will sell for about $7,500.
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Old 05-13-2007, 02:48 PM   #2
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..."A once all-American brand" - no -it still is....Just like Toyota is still all-Japanese...

"renowned" - I like that! At least some Indians have good taste..
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Old 01-29-2011, 01:36 AM   #3
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Honestly - driving in these countries is no fun. I was in this city in Asia, and the average speed I was going was 25MPH. Driving was no fun. I imagine in India it will be even worse.
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Old 01-30-2011, 12:08 AM   #4
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Arise from the dead, 4 year old thread! Live again!
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Old 01-30-2011, 12:07 PM   #5
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Looks like a spammer snuck in under our radar and revived the thread. DGthe3 was on the ball...
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Old 01-30-2011, 12:18 PM   #6
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Quote:
Originally Posted by KILLER74Z28 View Post
Looks like a spammer snuck in under our radar and revived the thread. DGthe3 was on the ball...
But I wasn't quick enough to catch it before someone replied.

By the way, I've noticed that you've got a bunch of really old threads in this section with only a handful of replies ... I take it the forum was a tad slower in 2006 with less than 400 members, vs now when we've got nearly 400 members online on a Sunday afternoon
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