NEW YORK (TheStreet) -- Shares of General Motors (GM) are down 0.19% to $32.10 this morning after the company put on hold a planned $1 billion investment and a new car platform launch in India, Reuters reports.
The Detroit-based automaker has previously committed to invest $1 billion in the country to double its share in the domestic passenger vehicle market to 3.6% by 2020 and to make India a major player in global exporting.
GM had also planned on launching a multi-purpose vehicle Spin and a new modular platform to manufacture lower-cost cars for emerging nations.
"The billion dollars was committed based on a certain product portfolio," said VP of Marketing Jack Uppal to Reuters.
First, placing "GM stock slides" in the headline is definitely way overblowing the .19% decrease, or in $$ it is somewhere around 6 cents. At the time I am writing my comment GM's stock us UP 5 cents. They should change the headline to "GM's stock increases". Meaning attributing a 5 cent increase or decrease to this news is ludicrous.
Done venting. Good to see GM at least changing plans to accommodate for reality. Hope they can figure it out as India is such a large market. Though with the rampant corruption and lack of political will I question if India will ever become the next China in my lifetime. Meaning I don't think India will get to the point it develops a large middle class and the required infrastructure to support the sale of a meaningful amount of cars GM that GM can make profits on (or profits worth the investment).
B-b-but a-a-all cultures and people are the s-s-same!
India is a dump, and in some cases more literally than you want to think. It's a shame, because I like almost everything about Indians more than the Chinese (who are soulless dog eaters and dog murderers).
I'm not sure where is worse: a place where they club puppies and think suffering makes their meat taste better, or a place where you just drop trou and poop on the street right before you pay your bribe to open your naan and papadum stand?
I considered changing the title to the thread as that is what I thought when I first saw the headline. But I figured it's not my place to change the title of an article.
Once more, the "money boys" are playing with words and investments as they see fit. In reality, this is an adjustment based on GM choosing to withdraw a planned investment and only affects it as people choose to interpret it - my money is staying put.
GM has nothing in its portfolio that can help it in India.
Spend some time looking at the A- and B-segments in India and it's easy to see why GM is failing so miserably:
Chevrolet Spark? Why buy this ancient heap when the same money buys a Renault Kwid, Suzuki K10 or Hyundai Eon?
Chevrolet Beat? Reasonable competitor to Honda Brio, Hyundai i10, and Suzuki Celerio. GM needs the new Spark/Karl NOW.
Chevrolet Sail? Well, the Toyota Etios is just as nasty. But the Ford Figo and Hyundai Grand i10 lay waste to both.
Chevrolet Enjoy? It's cheaper than Honda Mobilio and Suzuki Ertiga, but it's also crude and ungainly. The Spin would be a better entrant, but I don't see the Spin succeeding in India.
If and when the Essentia is launched, it's going to undercut the Ford Aspire, Honda Amaze, and Hyundai Xcent in price, leaving GM without a direct competitor to those top-sellers. It could do well against Tata's upcoming semi-three-box cheapie.
The Adra needs to be on the market yesterday. Ford EcoSport sells well and Maruti can't keep up with orders for the new Suzuki Vitara Brezza, itself developed specifically for India. Their sub-four-meter status gives them a price advantage over Honda BR-V and Hyundai Creta.
Where's the Sonic? Why isn't GM competing with Hyundai i10 and Suzuki Baleno? Maybe it's because nobody seems to want the Sonic. The Onix comes in under four meters. Why isn't it being considered?
The Cruze seems to sell well in its class and the Tavera is a taxi favourite in some regions. But GM needs more than just this.
Chevrolet's Microcar triplets from the last decade showed spark (pardon the pun) and was proof that GM was capable of creating interesting small cars. Apply the same thinking to current conditions and GM would be on to winners.
I like that GM now has people who question its business plans and ask whether
that money could be better spent in other areas (opportunity cost).
The money markets are driven by the selfish who want instant returns (flippers)
and not representative of those in there for the long haul (true investors).
if GM want , for India market : GM don't have a product which can win India now. The possibility was Adra/Trax which would have been good .But now there is Suzuki in that area and there is no point GM having a ME too product there.
If GM want now , the best opportunity is hybrid. Create localized version of Voltec ( low cost , couple-able with 1 and 1.4 ltr engines) be a supplier for all car makers. Good money opportunity where GM has a head start ( they have a 1 ltr 3 cylinder engine (both diesel and petrol ) and they know voltec. create a low cost one would be very easy leveraging data. They will get a lot support on this from GOVt also.
Here's a good Chevrolet lineup for India that a billion bucks might buy....
Chevrolet Spark
From 3.5 lakh rupees
New low-cost platform developed with a partner (PSA? SAIC?) for emerging markets
Competition: Datsun GO, Hyundai Eon, Tata Tiago
Chevrolet Beat
From 4.5 lakh rupees
Facelift of current Beat
Competition: Honda Brio, Hyundai i10, Suzuki Celerio
Chevrolet Essentia
From 4.75 lakh rupees
Beat-based "four meter" sedan
Competition: Tata Kite
Chevrolet Sail
From 5.0 lakh rupees
New hatch on stretched Spark/Karl platform replaces Chinese Sail
Competition: Ford Figo, Hyundai Grand i10, Nissan Micra, Suzuki Swift, Tata Bolt
Chevrolet Lova
From 5.5 lakh rupees
Sail-based "four-meter" sedan
Competition: Ford Aspire, Honda Amaze, Hyundai Xcent, Suzuki Dzire, Tata Zest
Chevrolet Onix
From 5.75 lakh rupees
Retouched and upgraded version of Brazilian Onix
Competition: Hyundai i20, Suzuki Baleno, Volkswagen Polo
Chevrolet Prisma
From 8.5 lakh rupees
Retouched and upgraded version of Brazilian Prisma
Competition: Ford Fiesta, Honda City, Hyundai Verna, Suzuki Ciaz
Chevrolet Adra
From 8.0 lakh rupees
GM would forego both the four-meter idea and the unexciting Trax/Tracker
Competition: Ford EcoSport, Honda BR-V, Hyundai Creta, Suzuki S-Cross
Chevrolet Spin
From 8.0 lakh rupees
It bombed in Indonesia and was discontinued. Maybe Indians would like it.
Competition: Honda Mobilio and Suzuki Ertiga
... in addition to larger models like the Cruze and Trailblazer.
Problem with Chevrolet cars is they come attached to a Chevrolet mind-set which does not understand how important value is to a market and do not have as much experience with the product segments, Opel recently expanded into Eastern Europe and understands some of the unique issues with price, poor roads and difficult financing.
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