Source AP ©

GM plans to boost production, sales in India, introduces mini car

General Motors Corp. plans to ramp up production and sales in India, one of the world's fastest-growing auto markets, the company's chairman said Tuesday as he introduced a mini car to Indian customers with a competitive price tag.

General Motors also is scaling up procurement of low-cost auto components from India in a move that will help keep costs low at plants in other parts of the world, GM Chairman and Chief Executive Rick Wagoner said.

"It is time to redouble our efforts on manufacturing and marketing here," Wagoner told a group of business leaders ahead of introducing the Chevrolet Spark mini car.

India's rapid economic growth over the past decade has boosted middle-class incomes and driven demand for cars, increasingly drawing the attention of global auto makers.

But Japan's Suzuki Motor Corp. and South Korea's Hyundai Motor Co. have done better in seizing the opportunity because of their focus on small, compact cars, which dominate Indian roads. Both GM and Ford haven't seen much success in that segment, largely because their previous offerings were not price competitive, and Indian buyers are highly price sensitive.

GM hopes the Spark will help change the course, with its base model priced at 309,000 rupees (US$7,300; EUR5,400).

The Spark "is a big part of our growth strategy here," Wagoner said. "With this new product and the investments we are making, GM sales and market share will continue to grow."

GM is building a new plant in western India to more than double its production to 225,000 vehicles annually. That will make India the company's third biggest production hub in Asia, after China and South Korea, where the company has capacities to manufacture about 850,000 and 700,000 vehicles, respectively.

The Spark faces tough competition from compact models such as the Hyundai-made Santro, and the Alto and Wagon R from Suzuki-controlled Maruti Udyog Ltd., India's largest car maker.

Both Maruti and Hyundai have extensive sales and service networks and have much larger production capacity than GM will have a year from now.

But Wagoner said GM's focus on India goes beyond sales of cars and market share.

The company operates a research and development center in Bangalore, India's technology hub, with about 800 engineers who are engaged in product development. It also has a laboratory with 100 researchers.

The company also buys low-cost auto components from Indian manufacturers for assembly plants in other parts of the world.

"We are going to radically ramp up sourcing from India," Wagoner said.

Nick Reilly, GM's Asia-Pacific head, said he sees the company making annual purchases of US$1 billion (EUR740 million) from Indian auto component manufacturers four to five years from now.

Demand from consumers across Asia will drive global car sales in the coming years, with the region accounting for 70 percent of the new global growth over the next decade, Wagoner said.

"Three of the top five and eight of the top 15 fastest-growing auto markets over the next decade are expected to be in the Asia-Pacific," he said.

India is set to become the second fastest-growing automotive market after China, he said.

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