Declining volumes force dealerships of the GM to shut shops

General Motors, GM


More than a third of General Motors (GM) dealerships in the country have shut shops over the past year because of declining volumes in an otherwise fast-growing domestic market.

Ninety of the 250 dealerships have downed shutters. Two years ago, the company had 280 sales points in the country. In other words, the network has almost halved in this period.

An industry insider said, “The company is compensating the dealers to manage fixed costs, but still, many are desperate to exit or switch over to rivals.” General Motors did not respond to queries on the closure of dealerships.

In the domestic car market, the global giant has only one% share, and has been losing share in the past couple of years.

During a visit to the country in July 2015, GM global Chief Executive Officer Mary Barra had said the company wanted to make Indian operations sustainable and move towards profitability. But for years now, the company’s operations have been saddled with losses.

About a year and a half later, the company continues to struggle in the country. As of the financial year ended March 31, 2016, its market share was 1.2%, compared to 2% the previous year.

In the April-January period of FY17, the share slipped further; now, it is below one% (0.9). Volumes are down by 17% to 22,696 units. In the same period, the domestic market expanded more than nine%.

The saving grace, however, has been exports — GM’s volumes have more than doubled this year. The company has shipped 58,523 vehicles during the April-January period, registering a surge of 129%. It joins like Volkswagen, Ford and Nissan — all of which have more exports from India than local sales.

On the domestic front, the plan to invest in developing new models has also been put on hold.

The company said there was a shift in customer preferences. “We are conducting a full review of our future product portfolio and have put on hold investment in our all-new vehicle family until we firm up our plans. Moving forward, our priority remains to establish the right business conditions for sustainable profitability,” said a GM spokesperson.

In 2015, Barra had announced investment of $1 billion to ramp up manufacturing operations and roll out 10 locally produced vehicles.