The GM conundrum

General Motors ,once the world’s largest car maker and cynosure of the American automotive industry ,recently hogged the limelight for all the wrong reasons . It filed for Chapter 11 bankruptcy wherein the company was dissolved and reopened with greater governmental oversight .

However, thousands of miles away in India its Indian subsidiary was grappling with a different problem of credibility. There was widespread market speculation that the financial quagmire that its parent has got itself into will adversely affect its Indian operations. Consumer sentiments and trust around GM’s brands plummeted, especially in India ,where consumers still carry raw wounds from being burnt by the Korean car maker ,Daewoo which was forced to shut down its operations ,leaving behind a host of matizs and disgruntled customers who could not service their cars or purchase parts .

So when all these was happening back in America, a feeling of déjà vu was seeping into the consumer mindset. The question doing the rounds was : Can GM India survive with an ailing parent ? .

To stem from this rot Karlos Slim, MD of Indian Operations has been on a whirlwind tour of GM India’s constituencies ,assuaging clients and dealers about the continuity of Indian Operations. Consequently, GM also recently launched a pan India wise media campaign to drive home that point.

However, GM’s problem is compounded by the fact it has never become a blockbuster seller of cars in India otherwise it would have been on a much solid ground . Even Karlos Slim himself concedes that they are nothing more than an upstart here. was quite bullish about GM’s prospects in the Indian market .His bullishness perhaps stems from the fact that the Indian market is perhaps one of the few markets where car sales are still zooming . So every auto maker under the sun, is desperate to bag his own share of the pie. As a result of that GM is ramping up its Indian production capacity by as much as 65% and is planning to widen its product portfolio to cater to the diverse needs of the customers. But it remains to be seen whether such optimism is well founded or GM India follows the tragic route of Daewoo.

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