GM files for bankruptcy, India ops safe
The Economic Times, June 2, 2009, Page 1
Giant To Be Pale Shadow Of Itself
GENERAL Motors, the lumbering, venerable and iconic American carmaker, filed for bankruptcy on Monday after years of struggling with huge labour costs, consumer apathy to fuel-guzzling cars and SUVs, and a determined bid by Toyota and Honda to succeed with better products.
The widely anticipated bankruptcy means that GM, once regarded as a symbol of American might and dynamism, will now be owned by the government. It will spend the next 60-90 days reorganising into a much smaller entity, and close or liquidate 11 factories and idle three plants.
In India, GM’s subsidiary will continue to operate and run its plants. Its president & MD Karl Slym told Nandini Sen Gupta & Abhishek Gupta of ET NOW that the Indian operations will not be affected and that consumers have nothing to fear. Excerpts from an interview:
GM India is saying it is business as usual but sales have been falling on global news. Sales in India were down 11.5% in February, 26% in March and 57% in April. What are you doing about that?
In 2008, while the industry shrank 2%, we grew at 10%. While the economy was falling, we were still able to buck the trend and grow. In the early part of this year, we were for sure affected by some of the news from North America, but we have also seen sales growth month-on-month in India.
There have been some misconceptions about what’s happening with GM in the US. But Monday’s final filing is a great step for us in India because it’s been made very clear that (the bankruptcy filing) is for the US operations only, and it has also been stated that GM India is not a part of the bankruptcy. Chevrolet will likely be one of the brands to survive post restructuring. But how much focus will India get?
As far as Chevrolet is concerned, any kind of concern should disappear today. The Asia-Pacific region is extremely key as far as GM is concerned and will be a part of any serious portfolio of the future. Let’s look at India—$1 billion spent in the last couple of years to put the infrastructure in place to grow not only in the short term but also in the medium and long term. Chevrolet in India is a part of the new re-invented GM and that’s what we have here. This really is the point when all consumers either past, present or future can feel very confident about the situation that’s going to prevail here in India.
What about Opel customers in India now that it has been sold to Magna…will you support them?
As far as Opel is concerned we procure parts and accessories that are not locally made. We still have the ability to do that through the restructured Opel Vauxhall scenario and therefore our Opel customers and dealers (who) service Opel vehicles have nothing to be concerned about.
Also, the new GM is expected to own a piece of Opel and will likely maintain product development ties with it. Either way there is a clear commitment to keep these businesses (Saab, Opel, Saturn, Hummer) as ongoing concerns. So, no one needs to be worried about Opel or question our commitment to support Opel customers in India.
What about stakeholders like vendors, parts suppliers, employees—will they be paid on time? Are their jobs secure?
Yeah absolutely. Of course we have had plenty of time and opportunity to communicate this to the stakeholders. There is no effect on our employees as far as their payments, salaries and job security in India are concerned. The payments to our vendors have always been on time and will continue to be on time. There is no interruption in our business. I am confident that Monday’s announcement is going to reinforce all those commitments that have been given to our stakeholders over the past. GM in India is here to stay.
What about working capital, etc? Will you, like GM Korea, raise your own money locally?
Of course. There are various methods for us to be able to fund additional investments in the future. I think the most important for us is that we already have 2.25 lakh units capacity versus the 65,000-70,000 units we sold in 2008. So we already have capacity in India for near and mediumterm plans. As far as new models are concerned, the other absorber of our capital, this month saw the launch of the LPG version of our Spark mini car and just a couple of months later we will bring the Chevrolet Cruze to India. By the end of the year a new mini car will also be launched. All these investments are complete and we are already producing those trial vehicles in our plants. These will hit the roads very shortly.
What about your vendors who will lose out on the global sourcing business?
Those who supply to our local operations continue as usual. Those who supply to our global and local businesses are facing the impact of the economic downturn. But with the filing, all stakeholders should be more assured as they see the US government backing GM. Now the direction is clear and there’s no confusion.
Lastly, are you guaranteeing full warranty, service and spares support to your customers in India?
Absolutely. It’s business as usual for us.
The Economic Times, June 2, 2009, Page 1
Giant To Be Pale Shadow Of Itself
GENERAL Motors, the lumbering, venerable and iconic American carmaker, filed for bankruptcy on Monday after years of struggling with huge labour costs, consumer apathy to fuel-guzzling cars and SUVs, and a determined bid by Toyota and Honda to succeed with better products.
The widely anticipated bankruptcy means that GM, once regarded as a symbol of American might and dynamism, will now be owned by the government. It will spend the next 60-90 days reorganising into a much smaller entity, and close or liquidate 11 factories and idle three plants.
In India, GM’s subsidiary will continue to operate and run its plants. Its president & MD Karl Slym told Nandini Sen Gupta & Abhishek Gupta of ET NOW that the Indian operations will not be affected and that consumers have nothing to fear. Excerpts from an interview:
GM India is saying it is business as usual but sales have been falling on global news. Sales in India were down 11.5% in February, 26% in March and 57% in April. What are you doing about that?
In 2008, while the industry shrank 2%, we grew at 10%. While the economy was falling, we were still able to buck the trend and grow. In the early part of this year, we were for sure affected by some of the news from North America, but we have also seen sales growth month-on-month in India.
There have been some misconceptions about what’s happening with GM in the US. But Monday’s final filing is a great step for us in India because it’s been made very clear that (the bankruptcy filing) is for the US operations only, and it has also been stated that GM India is not a part of the bankruptcy. Chevrolet will likely be one of the brands to survive post restructuring. But how much focus will India get?
As far as Chevrolet is concerned, any kind of concern should disappear today. The Asia-Pacific region is extremely key as far as GM is concerned and will be a part of any serious portfolio of the future. Let’s look at India—$1 billion spent in the last couple of years to put the infrastructure in place to grow not only in the short term but also in the medium and long term. Chevrolet in India is a part of the new re-invented GM and that’s what we have here. This really is the point when all consumers either past, present or future can feel very confident about the situation that’s going to prevail here in India.
What about Opel customers in India now that it has been sold to Magna…will you support them?
As far as Opel is concerned we procure parts and accessories that are not locally made. We still have the ability to do that through the restructured Opel Vauxhall scenario and therefore our Opel customers and dealers (who) service Opel vehicles have nothing to be concerned about.
Also, the new GM is expected to own a piece of Opel and will likely maintain product development ties with it. Either way there is a clear commitment to keep these businesses (Saab, Opel, Saturn, Hummer) as ongoing concerns. So, no one needs to be worried about Opel or question our commitment to support Opel customers in India.
What about stakeholders like vendors, parts suppliers, employees—will they be paid on time? Are their jobs secure?
Yeah absolutely. Of course we have had plenty of time and opportunity to communicate this to the stakeholders. There is no effect on our employees as far as their payments, salaries and job security in India are concerned. The payments to our vendors have always been on time and will continue to be on time. There is no interruption in our business. I am confident that Monday’s announcement is going to reinforce all those commitments that have been given to our stakeholders over the past. GM in India is here to stay.
What about working capital, etc? Will you, like GM Korea, raise your own money locally?
Of course. There are various methods for us to be able to fund additional investments in the future. I think the most important for us is that we already have 2.25 lakh units capacity versus the 65,000-70,000 units we sold in 2008. So we already have capacity in India for near and mediumterm plans. As far as new models are concerned, the other absorber of our capital, this month saw the launch of the LPG version of our Spark mini car and just a couple of months later we will bring the Chevrolet Cruze to India. By the end of the year a new mini car will also be launched. All these investments are complete and we are already producing those trial vehicles in our plants. These will hit the roads very shortly.
What about your vendors who will lose out on the global sourcing business?
Those who supply to our local operations continue as usual. Those who supply to our global and local businesses are facing the impact of the economic downturn. But with the filing, all stakeholders should be more assured as they see the US government backing GM. Now the direction is clear and there’s no confusion.
Lastly, are you guaranteeing full warranty, service and spares support to your customers in India?
Absolutely. It’s business as usual for us.
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