General Motors Eyes India Beyond Current Crisis As Strategic Hub For Asia-Pacific Power Train Market

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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite reeling under a cash crisis and grappling with the effects of worldwide economic woes, General Motors Corporation (NYSE:GM) (Detroit, Michigan) is eyeing India as a strategic hub in the Asia Pacific region to develop power trains. General Motors India (Gurgaon, Haryana), the wholly owned Indian subsidiary of GM, announced plans to invest $500 million to develop manufacturing facilities for cars and power trains. In addition to catering to local demand, GM plans to reach out to the markets in Australia, China, Korea and Eastern Europe using its Indian operations as the hub.

The firm plans to invest $120 million to set up a power train facility in Talegaon, Maharashtra, to manufacture engines, gearbox and transmission components. The manufacturing unit in Talegaon began operation in September with 700 employees. The firm is also looking to expand its engineering and research and development (R&D) center in Bangalore, Karnataka, where it currently employs 1,600 people, 100 of whom are in R&D. It plans to hire 500 employees in the latter half of 2009, 300 of whom will be deployed at the car manufacturing facility in Talegaon and 200 at the proposed power train manufacturing facility also in Talegaon and the engineering center at Bangalore.

GM India, which currently holds a 4% market share in India, is looking to capture 10% of the market by 2010. The firm currently sources automobile components worth $500 million from Indian suppliers and is looking to purchase parts for $1 billion by 2010. The firm, which had 100 service outlets and 100 dealerships in India at the beginning of 2008, will end the year with 200 service outlets and 200 dealerships, 50% of which are located in rural markets.

GMI's sales stood at 65,000 units from January to November, a little higher than its sale of 60,000 units during the same period last year. However, the firm reported a 19.5% drop in sales for November this year at 4,307 units, compared with 5,356 units last year. The firm has a sales target of 70,000 to 72,000 units this year at an expected growth rate of 15% to 20%. In the U.S., GM has requested for an emergency federal bailout with immediate cash infusion of $4 billion for this month and an additional amount of $4 billion for the next month. For more information, see related December 8, 2008, news article - $34 Billion? $75 Billion? $125 Billion? What Will the Automotive Bailout Truly Cost?

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