Team-BHP - GM looking at Rs 2 lakh mini car for India

GM looking at Rs 2 lakh mini car for India- Automobiles-Auto-News By Industry-News-The Economic Times

"NEW DELHI: It may have entered bankruptcy protection in the US, but General Motors still has ambitious plans for India. The auto major is planning to develop a small car which will be its cheapest globally, at a possible price tag of under Rs 2 lakh.

Nick Reilly, GM Group V-P, told TOI that the company was looking at developing a car from India that would be positioned below the ‘Spark' mini car. "I would say we are studying that... and (we) do think there is an opportunity for something below the current mini car offering Spark," Reilly said in a conference call from Shanghai. However, it would "not be a Tata Nano equivalent", he added. "

Quote:

Originally Posted by CarsPG (Post 1331248)

"NEW DELHI: It may have entered bankruptcy protection in the US, but General Motors still has ambitious plans for India. The auto major is planning to develop a small car which will be its cheapest globally, at a possible price tag of under Rs 2 lakh.

Tata's 1 lakh car ended up at close to 1.3 lakh for the end-user. Now if GM's 2 lakh car's end-user price is proportionately calculated it comes to around 2.6 lakhs. Now we are already in the Spark territory. I suppose GM's 2 lakh car is a Spark with the 800 cc Matiz engine; nothing more and nothing less.

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Originally Posted by tortoiseNhare (Post 1331275)

Quite interesting. But just consider that the 1lac tag was given how many years before and what was the steel and other cost price at that time.

Btw, I think the 2lc is again ex-showroom price, if at all comes in same price.

With these announcements, they are just trying to tell the Indian public to keep buying the cars, because they have stopped that since february fearing Daewoo like results after the bankruptcy. They are trying to instill confidence because if they don't, they will sell just 20 Magnums and 50 Aveo sedans like the past few months which is almost a no no when Maruti, Hyundai have no issues selling 9000 Dzires and an even greater number of i10's per month.

Watch out for a ad campaign saying GM is on a roll in India. I do not believe they will invest to make a new 2 lac car in India for the developing markets. That itself is a lot of work and about 3 years of it, it has to be the Spark with Matiz's 800cc engine.

This happens in all countries. Ford's market share in US is the highest since 2006 ( I saw today on BBC), people stopped buying GM and Chrysler because the Chapter 11 was coming close.

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Originally Posted by hillram (Post 1331318)

I cant believe how GM can make such preposterous announcements when they are a sinking ship.

I don't agree at all. They are anything but a sinking ship. The new GM will be a far better company and something the old GM always aspired to become. Imagine the new GM without the baggage of the old one which is hummer, UAW etc.

The new GM will be a far leaner, meaner competitor and don't forget they have GM Daewoo with them to take on developing markets. Announcements like these are natural. They want to make sure people know they are not sinking which I think is okay. American bankruptcy protection is very different from what we saw in Daewoo's case. GM India will be the part of the new GM and so will be GM China where it is the largest automaker and of course the Korean operations too will come under the new GM umbrella.

They have great cars lined up too - the Beat (worldwide Matiz replacement - will co-exist in India with Spark) and the Cruze that will challenge Skoda Laura.

The American line-up will also have very exciting hybrids, more than any other competitor.

Actually GM was planning something on those lines for a while. However the C11 bankruptcy of the parent has definitely put a spanner in their works. Till date I believe GM has invested something like 800 million greenbacks here... All that was GM, US money which was invested. Hereafter though GM US will find the going tougher and may not be able to invest any further.

In such a scenarion where does GM India envisages to raise the money to develop an entirely new platform? I find that part a little tough. In fact if they (GM India) manage to extract any money from their bankers after the GM US fiasco it will be a big achievement on their part. I do not see any new platform coming out anytime soon. Although one far away possibility remains. It seems like GM Korea managed to raise some good amount from the KDB recently. Now if all the profit making units (mostly GM Asia, to loosely say so) can come together on one platform and start cross-subsidizing each others efforts to develop joint models then it may happen. But as I said, thats a long shot.

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Originally Posted by abhi1309 (Post 1331431)

I don't agree at all. They are anything but a sinking ship. The new GM will be a far better company and something the old GM always aspired to become...

Abhi, I think you have picked up a lot that the media is saying, which is not bad as per se. However there is also a lot of hype involved in the media releases (sometimes in the guise of articles). True, GM US has a vision statement and what you say may also be a part of that. So yes, they are probably not a shinking ship.

However going further things will only get tougher. As it is, with 60% holding of US Govt and 10% each of Canada and Germany, the new GM is already being dubbed as Government Motors. They will have a huge amount invested through the government route and all that will be taxpayer's money. Do you think a government organization can really be nimble enough to react to the market forces quickly enough? Forget investing in overseas markets to develop country specific products for the Non-US markets.

I do not see GM India launching a brand new platform from scratch any time soon, unless it can self-generate the funds which is a tall ask IMO.

I believe Daewoo and GM are two different car companies,and how each will or has be/been affected by bankruptcy will be different.GM is a massive car company whose only the american version as well as some of the european brands are the bane of the group.However it has a profitable Latin american,Korean and Asia-pacific subsidiaries which gives GM a better chance to make out of this bankruptcy in a successful manner.
GM india might have some funding issues for expansion but with the Talegoan and Halol plants at full capacity they anyway will have some 200,000 units which is enough for Beat and Cruze.

I feel that GM will become even stronger after it emerges from Chpt 11. Now that the US Govt own 60% of the company, GM will most likely win a majority of the contracts to supply government vehicles and also the US govt will not allow the company to fail.
Plus as mentioned earlier, after discarding the dead weight ie UAW and Hummer, GM can focus on its core brands.
The recent cars from GM like the Malibu, Cruze and Beat have been getting rave reviews.

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Originally Posted by avishar (Post 1332051)

GM is a massive car company whose only the american version as well as some of the european brands are the bane of the group.However it has a profitable Latin american,Korean and Asia-pacific subsidiaries which gives GM a better chance to make out of this bankruptcy in a successful manner.

I think we are forgetting that GM US is the parent company of the group. The Country managers can say what they want, but if the Parent Company is liquidated, I don't think the subsidiaries will survive. Most likely they will be sold off to potential suitors.

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Originally Posted by dude131 (Post 1332083)

I thought that a big chunk of the Army Contracts were given to Hummer only so don't know how will they get more contracts if they sell Hummer (Pls. Pardon me if wrong :) )

It's a charade. The "new" GM will have the same old management (Fritz Henderson and his fellow clowns) and culture which led it to its present state. GM didn't become vulnerable in last 12 months due to credit crisis as media is misreporting, but have been a borderline case for 10+ years.

GM have been booking losses, and facing reduced market share for a long time in US. Of course, they kept the volumes high to give illusion of size......but volumes sold at no profit (or losses, as now) are useless. Now as last ploy they want to try this high volume tactic in India against established players who have competitive products, laughable.

There's no hope for this company, they might not crash today because papa Barack is running the currency printing presses overtime, but instead GM will crash and burn in an even bigger fashion couple years later.

For Indian consumers, I see not one reason to purchase a GM product when similar level products are available from other manufacturers in far better financial position (with better after sales service to boot).

If we were Chinese, yes, we should continue to buy GM products since in China the local joint venture partners are strong, when GM collapses they will take over the stake and production will continue. Not so in India, GM are on their own. No other manufacturer will come forward to pick up the remains, remember Daewoo's factory couldn't be sold and that was when there was geniune demand for extra manufacturing capacity.