GM India closes Halol plant

Twenty-one years after General Motors began vehicle manufacturing operations at Halol in Gujarat, the American automobile major shut down the plant today, bringing to a close a chapter in Indian automobile history. GM India will now consolidate all its operations at its Talegaon plant in Pune, which opened in September 2008. 

The first clue to the Halol plant’s closure had come two years ago – on July 29, 2015 – during GM CEO Mary Barra’s second visit to India. A media statement had said, “Consolidating our manufacturing in a single location in India will support the long-term sustainability of our business in a challenging emerging market.”

The Chevrolet Tavera was the last vehicle to be produced at the Halol plant today. The facility, which went on stream in June 1996, had a 110,000 units per annum manufacturing capacity. While production of the Cruze sedan at the facility was suspended some time ago, manufacturing of the Enjoy MPV was stopped in June 2016 due to poor sales.

Talegaon, which currently has a production capacity of 130,000 vehicles and 160,000 engines per annum, will increase its base capacity to 220,000 vehicles by 2025. It will also become a global export hub for GM, with more than 30 percent of its annual production planned for markets outside India.

In an official statement released at 1.30pm, GM India president and MD Kaher Kazem confirmed that all GM manufacturing in India will now be at the Talegaon facility. “The consolidation of manufacturing at our Talegaon facility is an important milestone for GM India,” said Kazem. “That said, we are mindful of the impact on our employees at Halol. We have committed to support them through this necessary transition with generous separation payments or the option of continuity of employment at Talegaon.”

SAIC set to take over Halol plant

GM has for long been exploring the asset-only sale of the Halol plant. It may be recollected that the Hong Kong-based SAIC HK Ltd, a subsidiary of SAIC Motor Corporation which imports and exports spare parts, had first filed a notice with the Competition Commission of India in mid-January 2017 to acquire the Halol plant.

However, on April 10, SAIC Motor issued a clarification denying media reports that it had signed a pact with GM to take over the Halol plant. "SAIC's Halol plant deal is subject to GM’s submission of all government approvals, settlement of labour and all other pending issues by GM," the statement said. 

While the deal with SAIC, which has done due diligence on the Halol plant, might not be signed and complete, the company could likely make an announcement of the plant takeover after completion of negotiations with the Gujarat government for some sops.  

For GM India, which has a meagre 0.85 percent market share of the domestic passenger vehicle market, exports have helped keep its Talegaon plant running. After failing to ignite much interest for its cars in the domestic market, the American carmaker had some time ago shifted its focus on exports to better utilise the manufacturing capacity investments made in the country.

The strategy has reaped benefits as the Chevrolet Beat, which is sold as the Spark in many countries globally, has become one of the most exported cars from the country in 2016-17. GM India, which produces the left-hand-drive Chevrolet Beat at its Talegaon, Pune plant, exports the car to many markets, including Mexico, Chile, Peru, Central American and Caribbean countries, Uruguay and Argentina. In FY'17, the company exported 70,969 units, an 88 percent YoY growth.