Sunday, February 06, 2011

A Detroit Icon Abroad

Indian Express: General Motors to Bring Sports Car Camaro to India
Bloomberg: GM Aims to Triple Vehicles Sales to India by 2013
Business Standard: Q&A: Tim Lee, President, International Operations, GM
Society of Indian Automobile Manufacturers: Domestic Sales Trend
Chevrolet India: Chevrolet

General Motors (GM) plans to expand its operations in India, and GM is showing its commitment by bringing the Chevrolet Camaro to India. GM’s commitment to India has been in doubt to many Indians because GM currently has only 4% of the Indian automobile market, despite being in India since 1994. The Chevy brand is the only GM brand in India and offers eight models. However, a perusal of the Chevy India website reveals eight remarkably similar vehicles, ranging from a small minivan to cars so small no American would dare drive one, but the cars are suited for crowded Indian roads.

The Camaro’s presence is supposed to create excitement around the GM brand. The arrival of an American symbol of mechanical power and industry tells many Indians that their nation is becoming one of the wealthy nations of the world, and that GM believes in India’s economic rise too. No timetable is set for the Camaro’s entry, but GM is working on a right-hand driven Camaro so it can operate on the Indian roads, which, like in England, require one to drive on the left side of the road. However, the price is likely to be prohibitive for most Indians in the next few years. Long term, the goal is, of course, to sell Camaros to newly wealthy Indians. One factor in the price is that the Camaro will be completely built outside of India, making it subject to a 110% import duty, more than doubling the price of the car. However, the Camaro, as priced in India, would still be the cheapest sports car in the world. GM admits it will not sell many Camaros in India, but the real goal for GM is to get Indians into Chevy showrooms to see the Camaro, and once there, to see what else Chevy has to offer.

Along with the Camaro, GM plans to introduce six models in India in the next two years in an effort to triple GM’s annual sales in India to 300,000 units by 2013. The introduction of the new models follows GM’s 36 month period of increased investment in India. GM has already announced plans to invest $400 million in factories and marketing through 2013. Like the new models, the investment should help GM reach its 300,000 sales target.

Although GM has sales targets, Tim Lee, the head of GM’s international operations, says GM’s first priority is profitability and sustainability. Part of becoming profitable is joining the India’s proportionately and absolutely large commercial automobile market, which composes 40% of India’s automobile market. Accordingly, two of the six new models are commercial vehicles and are GM’s first entry into the commercial market.

Toyota, Volkswagen AG and Nissan have also expanded factories and introduced new vehicles to India to increase their stake in the second fastest growing automobile market in the world. Automobile sales in India increased 26% last year to reach 12.3 million automobiles sold from April 2009 to March 2010, and GM’s sales rose 59% to 110,804 vehicles sold in 2010. These upward trends are expected to continue as passenger car sales, currently 1.87 million, are projected to reach 3 million by 2015, and India’s rapidly growing consumer base increases the demand for automobiles.

1. Why do passenger cars in India make up such a small share of its automobile market?
2. Did India’s recent increased investment in its roads have any effect on any car company’s decision to invest in India, or were all the companies going to expand anyway given how rapidly India is growing?

No comments: