GM considering India as small car hub

General Motors Corp. (GM) is considering making India a hub for the manufacturing of small cars, a senior executive at its local unit said today, during the inauguration of its second factory in India at Talegaon, near Pune.

GM had recently announced the addition of an engine plant manufacturing facility at Talegaon in which it has invested $300 million. The proposed engine plant will have an annual capacity of 1.6 lakh engines that could be expanded to three lakh engines per annum. (See: General Motors setting up $200 million engine facility in Maharashtra)

Now, GM has proposed a further expansion of the new plant in the near future. Initial estimates had called for a production run of 140,000 vehicles a year, slated to increase to 225,000 vehicles per annum in the near future. Latest projections go even further. More importantly, the plant may well become the epicentere of the GM global small car hub.(See: GM to invest $500 million for new small car, Cruze)

"Eventually, we can scale the capacity to 300,000 units a year at this facility depending on market demand," Karl Slym, president and managing director of General Motors India Pvt. Ltd. told reporters. "We are considering this (plant) as an export hub for small cars."

India's car sales, which have doubled in the past five years, may triple to 30 lakh by 2015, according to government forecasts. That has attracted a combined $6 billion of investments from companies like General Motors and Nissan Motor Co to expand in the country as demand slows in the US and Japan an other developed markets.

GM, which has invested $1 billion so far in India, has more capacity than demand in the country, Frederick Henderson, chief operating officer, said in Talegaon today. India's medium- term outlook is strong, he said. (See: GM has big plans for India; investment in the country crosses $1 billion)

The company's profitability is on track in Asia, said Nick Reilly, president, GM, Asia Pacific, without elaborating.