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After getting off Indian roads, exports drive GM into profits

Saturday, June 30, 2018, 4:34
This news item was posted in Business category and has 0 Comments so far.

General Motors India which exited the domestic market last year has broken into making operational profit on the back of strong export orders, a testimony to the Indian government’s Make in India programme. For the American carmaker which set up a manufacturing base in the country in 1996, several attempts to crack the domestic market failed, but strong demand for its Made in India car in Mexico has earned GM an operational breakeven, several people in the know said.The sale of its Halol factory in Gujarat, reduced workforce and higher production has led to this turnaround, said one of the four people in the know. “There were fears of Talegaon plant closure earlier, and the company had engaged consultants to come up with alternatives. But in the wake of strong demand for Beat in Mexico, GM India has given guidance of production till 2021 at least. Operationally, the company is making money now, if it is in red, it will only be due to accounting adjustments due to sale of Halol plant, merging of tech centre etc”Much like GM, even the likes of Ford, Volkswagen, Renault-Nissan have ensured that exports enables them to sweat the existing assets to deliver break even, in order survive and stay relevant for Indian market, which is pitted to become the third largest market in the world in the coming three to five years.In an email response, GM India official spokesperson said the the company’s decided last year to focus the business on manufacturing vehicles for export markets, as the clearest pathway to profitability. “The successful implementation of our restructuring, and our sharp focus on vehicle quality and our export market customers are delivering improved financial performance. Like any business, we continue to optimize our operations to further improve financial performance,” the GM spokesperson said declining to get into financials.For Ford, GM and Volkswagen, the exports have grown by 50% to 100% in the last three years and have added to the bottom-line of the company. While the German car maker has broken even and has been registering net profit over the last 4-5 years, a strong demand for EcoSport and Figo has meant Ford India has been making operational profit over the last three years.As against triple digit losses in crores incurred over the years, GM was able to register a marginal operational profit, said one of the few people in the know of the company.General Motors today is the fifth largest car exporter from India contributing to 11% of country’s passenger vehicle shipments. The small car is very successful in Mexico market and it accounts for 62% of the Latin American country’s ‘A’ segment. Apart from fully built car exports, GM ships about 30 containers per week of components from India. Last financial year, GM India exported about 25000 engines from India.GM has also added the Beat Active, a new model for the overseas market and in the second half of the year, the company will also be adding Peru and Chile for the exports market.Anuraag Mehrotra, MD of Ford India in an interview to ET last year had said, the company’s revenues have been growing by over 30% and EBIDTA too has been growing steadily.

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