General Motors' New Strategy in India
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Case Code: BSTR410 Case Length: 17 Pages Period: 1984-2011 Pub Date: 2012 Teaching Note: Not Available |
Price: Rs.400 Organization: Hero Group, Honda Motor Company, Hero Honda Industry: Automobile Countries: India Themes: Joint Venture, Strategic Alliance |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
GM in India
GM had a long history in India. Its cars were first imported in India between 1918 and 1928, mostly by the rich. The first generation of GM vehicles imported into India were Chevrolet's small four-cylinder Tourers. They were highly preferred at the time because of their fuel efficiency and the ease of running them. GM first entered the Indian market with the launch of its Chevrolet brand in 1928. GM had set up an office in Mumbai (then Bombay) and an assembly plant in Sewree, Maharashtra. Production of cars started in 1928 with Chevrolet's National Series AB Touring. GM built 13,903 cars and trucks at Sewree in the first year of the plant's operation...
The Second Entry into India
After the economic reforms that were initiated in the early 1990s, the automobile sector and the passenger vehicles segment in particular saw tremendous growth. The gross turnover of the Indian automobile market grew from US$ 20,896 million in 2004-05 to US$ 38,238 million in 2008-09. Though two-wheelers still dominated the Indian automobile market, passenger vehicles started to take a significant share in the total automobile market due to the increasing income levels of the people...
Enter 'Beat'
GMI launched another sedan called the Chevrolet Cruze in the Indian market in October 2009. The Chevrolet Cruze was well received in the Indian market and got good reviews from industry analysts. The Cruze's powerful engine coupled with its compact design made it highly suitable for the congested Indian roads. By June 2011, the Chevrolet Cruze had clocked in sales of 860 units per month, making it one of the best performing premium sedans in the Indian market. Despite the success of GMI's first small car, the Chevrolet Spark, the company could not make any significant impact on the Indian automobile sector....
A Warm Reception
GMI hoped that the Beat would lift its Indian sales from 70,000 units in 2009 to 100,000 units in 2010. Before the Beat was launched in the Indian market, it was launched in Korea, Europe, and East Asia and was selling 5,000 units a month in the Korean market. GM hoped to release the Beat in 150 countries around the globe to make it a truly global car. Apart from domestic production, GM planned to make India an export hub of the Beat and export 20 percent of the units to the Europe and Asia Pacific markets. By this, GM hoped to follow many other global car manufacturers which had made India their global automobile manufacturing hub...
Leveraging on its Alliance in China
The increase in the sales of the Beat in spite of the problems faced by the Indian automobile market like increasing fuel prices and high interest rates on vehicle loans was seen by many analysts as the sign that GMI was finally improving its performance in the Indian market. Analysts said that GMI had started to understand the preferences of the Indian customers. They said that high fuel efficiency and the low price tag were the main reasons for the success of the Beat diesel in India. But some analysts warned that the increase in the sales of a single model could not be inferred as a turnaround in an automobile market like India which was turning increasingly competitive...
The Road Ahead
In November 2011, GM appointed Paddock as the new President and Managing Director of GMI, replacing Slym, who moved to SAIC-GM-Wuling in China as executive V-P. Paddock, who had held several key positions in product planning and program management in GM in the US, Europe, and Asia, was given the responsibility of spearheading the further growth of GMI. Paddock had held several important posts in product planning and program management in the US, Europe and Asia, since joining GM in 1992...
Exhibits
Exhibit I: Gross Turnover of the Automobile Industry in India (In US$ Million)
Exhibit II: Segment-wise Market Share of the Indian Automobile Market for 2010-11
Exhibit III: GM's Timeline in India
Exhibit IV: Chevrolet Models in India
Exhibit V: Sales of Automobiles in India
Exhibit VI: Sales of Beat from October 2010 to October 2011
Exhibit VII: Change in Market Shares of Different Automobile Manufacturers in India
Exhibit VIII: Revenues and Profit after Tax (PAT) of GMI from 2005-06 to 2009-10
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