General Motors Corp, once the biggest car company in the world, is now in dire straits in its home country and may have to file for bankruptcy unless the US government bails it out.
In fact, October has turned to be a nightmare month for most auto companies in the US and most of them are putting off releasing sales figures for the month.
According to analysts, car sales in the US, plunged 32 per cent in October 2008, to 1991 levels. In addition there was an overall sales decrease of 10 per cent for the first 10 months of the year.
In the same period, car sales fell between 7 and 8 per cent in Germany and France, and 13 per cent in Japan. GM and other automakers have since then shut down many plants in North America and are shifting focus to other countries which have been less affected by the slowdown.
General Motors for one is continuing unfazed with its plans in India and Russia. In India, in the past one year, the company has committed $ 200 million in investment in a new plant in Maharashtra and its latest plans include launching a mini car that would compete against the Nano and a plethora of mini cars that will hit the Indian market by 2010. These include ultra small cars from Toyota Motor, Bajaj Auto, Renault Nissan among others.
General Motors plans to roll out its mini car in India in 2009 from its Talegaon plant, near Pune. This will be followed by the launch of premium car Cruz sedan by 2010.
P Balendran, GM India vice president corporate communications insists that, ''The company is neither reducing production, nor going for a lay off. In fact, we are adding our head count. The second production unit in Talegaon enabled us to meet the increase in demand for the entry car segment. At present, the plant is working in single shift and produces around 200 cars per day. He adds that by 2009 the company is planning to add a second shift. This apart the company is also planning to upgrade its other existing models in the market.
The company's facility in Talegaon is GM's second vehicle plant in the country. It has an annual capacity of 1,60,000 units, expandable to 3,00,000 units.
General Motors India vice-president (marketing, sales and after-sales) Ankush Arora said, "Our India plans remain intact and investments will continue as announced earlier. The company's marketing investments will be as per plan," he said.
In the days ahead, GM is also planning to concentrate on the Indian rural market to drive growth and scale up its market share to 10 per cent in two years from 4 per cent now.
Karl Slym, GM India managing director, said, ''In the present situation we would be focusing more on rural market and smaller towns. We would aggressively go to East India as we see a substantial potential there.''
At present, more than 50 per cent of the total sales of the company take place in tier I cities. The company is however taking initiatives to penetrate the Indian rural market.
Company officials say its rural drive is due to the fact that rural market and smaller towns have not been heavily affected impacted by the present slowdown as the cities. Another plus about rural India and small towns is that buyers prefer to buy cars against cash than to go for car loans.
More than India GM Corp is upbeat about the Russian market.
Last week the company opened a new plant outside St. Petersburg with an investment of $300 million (3 trillion ruble) which would double GM's production capacity in Russia. The new plant will initially manufacture 40,000 cars a year and the total planned output is between 70,000 and 75,000 cars annually.
The current combined capacity of GM and its other Russian partners is 100,000 cars. The new plant will employ 1,500-1,700 people.
Initially, the new plant will manufacture Opel Antara and Chevrolet Captiva SUVs. By mid 2009, GM also plans to launch the Chevrolet Cruze and Opel Astra in the country.
General Motors is now the leading foreign car manufacturer in Russia and intends to stay that way. The company's sales in Russia grew by a magnificent 44 per cent through September 2008 against last year and was 23 per cent more than Russia's overall auto growth. By the end of 2008, GM targets selling over 400,000 cars in Russia, including imports. It also expects Russia to become Europe's biggest car market in 2009.
While Europe and the US continue to reel under an unprecedented economic crisis Russia has been less affected. While in the first half of 2008, car sales in Russia grew by 41 per cent to 1.7 million units, analysts say the car market growth there in the first nine months of this year would be between 22 and 23 per cent. Hence in Russia, car sales will decrease overall by between 5 and 7 per cent.