General Motors, the largest US automaker and the third biggest in the world, announced on Wednesday it would pour $1 billion over the coming years into its Indian operations to have the country its new worldwide export hub.
The investment comes amid a production capacity reduction in India, as demand has remained feeble following the nation’s recent recession. The Detroit automaker, with an installed production output capacity of at least 280,000 vehicles per year in India, is going to drop the rate to 220,000 units annually by 2025, with plans to cease production entirely at one factory and slightly increase output at another plant. “We need to have that kind of consolidation and rationalization to make sure we are here for the long term, that we have a sustainable business,” commented chief executive officer Mary Barra during a media brief in New Delhi. India’s internal auto market has been weak during the past years, as yearly deliveries remained under three million autos. Analysts still forecast the country will surge to become the world’s third-biggest passenger vehicle market behind China and the United States by the start of the next decade.
GM, present in India for the past two decades, has seen its market share slowly fading and still loses money on its operations there. During the past financial exercise, in the year to March, according to a company filing with the corporate affairs ministry, the automaker incurred losses of 38.5 billion rupees ($604 million) in India.