18th May 2017 was a busy week for India’s automotive industry. One would think that it was the financial year end which was causing all the drama, but not really.
It was the week when, to some people’s surprise and other’s ‘that was expected’ reactions, GM India decide to call it quits – no more of the beloved (?) Chevrolet brand on India’s roads anymore. Cars will continue to be produced (or so GM claims, at least for the time being), but only to be exported to other markets in the APAC region.
The fact that GM is withdrawing from India does not come as a surprise – GM’s Chevrolet brand hasn’t performed well in India, in spite of GM introducing new models in recent years. In the segment, in which GM introduced its vehicles (mostly hatchbacks), there had already been an intensive competition from the likes of Maruti and Hyundai, and more recently Nissan. It would have perhaps been better for GM had it introduced models such as Opel or even Cadillac to lure a wider segment of India’s population. One of the reasons OEMs such as Nissan, Honda, or Toyota have done well is that they constantly innovated for the India market, changed designs, and introduced new models and variants that catered to a wide customer base. GM seems to have fared poorly on that front. GM simply failed to sense of the pulse of India’s car buyer who looks for an all-inclusive deal: value-for-money + safety + luxury + service + brand appeal + etc., which clearly was not being provided by the American OEM.
As GM was announcing its exit, Volvo, a Swedish OEM, shared the ambitious goal of doubling its market share in India’s premium segment by 2020. Interestingly though, Volvo’s announcement to start assembling premium cars did not come as a surprise. It already has a good brand name in the CV segment and in the PV segment, the section of India’s customers who would buy a Volvo car already associates it with classy design and exceptional safety. Local assembly would, in fact, be a boost for Volvo if they are able to introduce locally made, India-priced cars as well as use this India production as a hub for South-east Asia exports. Indian car buyers are hungry for more and more international OEMs to enter the market and provide them with world-class products, and cars are no exception. Albeit late to the party, Volvo has the breadth of quality products and service competence to make a strong dent in the premium segment.
So, while 18th May was good for some and bad for quite a few, the dynamics of India’s automotive market continues to keep OEMs on tenterhooks – yes, there is a great opportunity if one gets the formula right, but the pill of failure can be extremely bitter.