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GM India unfazed by parent's bankruptcy; plans fresh launches news
03 June 2009

GM India yesterday clarified that it would continue to operate in the country even as its parent filed for Chapter 11 bankruptcy  protection. (See: General Motors files for bankruptcy protection).

In a press release, GM India said it would go ahead with its plan to launch new cars including the mid-size sedan Cruze, a new mini-car (code M300) and an array of alternative fuels cars.
The company clarified that it was not included in the Chapter 11 filing and would continue to operate normally.

"The efforts will still continue, but I am not sure of the actual timeframe because of the different ownerships of some of those parts of GM and also because of the overall decline in volumes," especially in North America," GM India president and managing director Karl Slym said in an interview with Dow Jones Newswires.

"The volumes on an annual basis are going to be lower at least for a period of time while the economy recovers in the US," he said.

GM India has invested more than Rs5,000 crore ($1.06 billion) in the past 14 years to build two factories in the western states of Gujarat and Maharashtra. The Gujarat factory at Halol has an annual capacity of 85,000 vehicles, while the Maharashtra plant, which started operations last September, can currently produce 140,000 vehicles a year.

Nick Reilly, GM's Asia-Pacific president, yesterday said the company would continue to source parts from India and China and the two countries could also become manufacturing hubs for small cars as global demand for such vehicles expands.

The minicar will be priced at about Rs400,000 he said, adding, the new Chevrolet Cruze sedan would also be launched by September.

GM India currently produces six cars and sport-utility vehicles of the Chevrolet range, including the Spark minicar and Optra sedan.

The company sold 65,702 cars and SUVs in India in 2008.

According to experts , the bankruptcy filing by General Motors yesterday will have a serious impact on the India car parts industry.

The auto component industry has been facing surplus capacity for the past several months and this may add to its woes. Those who have not diversified its client base will be the most hit by this bankruptcy filing noted one industry analyst. GM had sourced about $500 million of auto parts from India in 2008.

GM India, however, said the recent developments in the company, coupled with the present economic slowdown will delay GM's plans to buy about $1 billion of parts from India by 2010.

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GM India unfazed by parent's bankruptcy; plans fresh launches