GM Puts India Investment Plan on Hold

By Santanu Choudhury and Gautham Nagesh 

General Motors Co. has put a $1 billion India investment plan on hold as it reshuffles its product plan to better meet changing consumer tastes and jump-start its sluggish performance in the fast growing market.

A company spokeswoman said Monday that GM will no longer plan on launching Chevrolet Spin minivan in India and will instead focus on the fast-growing sport-utility vehicle market in India. Regulatory uncertainty is also giving the Detroit auto maker reason to re-evaluate its strategy, she said.

"We are conducting a full review of our future product program in India, " the spokeswoman said. "We are also putting on hold future investment in our all-new vehicle family in India until we firm up our product portfolio plan."

The review was earlier reported by Reuters.

India is the latest in a series of markets where GM has restructured its approach under Chief Executive Mary Barra. It has pulled out of some markets, including most of Russia, and dialed back sales of certain types of lower-margin vehicles in the U.S. and Europe. Production in Korea, Brazil and other markets has been shifted or is being evaluated.

India, forecast to eventually become among the biggest in the world by 2020, has been difficult for GM to crack. While domestic manufacturers have long dominated the market, certain foreign brands, including Hyundai Motor Co., have made significant progress while investing heavily in SUV production.

GM was one of the first entrants in the Indian auto market when it began operations in 1996. But the company has been a laggard and trails every major auto maker including Ford Motor Co., Suzuki Motor Corp. and Toyota Motor Corp.

GM's market share in India through the first six months of 2016 was 0.9% vs. 1.4% for the first half of 2015

Last July GM announced its plan to invest $1 billion in India to introduce a new low-cost vehicle platform with its Chinese partner SAIC Motor Corp. for emerging markets that is aimed to spawn 10 new vehicle models over five years. GM will shift its focus toward SUVs, which have become the preferred choice for many newly affluent Indians who must tackle potholed roads in much of the country.

GM will proceed with its plan to launch the new Beat hatchback, Essentia compact sedan, Cruze sedan, and the Beat Activ hatchback.

Part of GM's plans unveiled last year included closing its factory at Halol, in the western state of Gujarat, while expanding capacity at its plant at Talegaon, in Maharashtra state to 220,000 vehicles a year.

Write to Santanu Choudhury at [e-mail] and Gautham Nagesh at [e-mail]

(END) Dow Jones Newswires

July 25, 2016 16:49 ET (20:49 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.