The tweet from Chevrolet India came without warning on May 18th. Chevrolet had abruptly decided to stop sales in India. The Indian press and social media was abuzz with theories. Wasn’t the Indian market good enough for Chevrolet? Does this mean the “Make In India” program will take a hit? Are Indian Government policies not good enough?
Let’s look at each of these assumptions.
Most of the passenger vehicle (PV) manufacturers continued to show double digits in May. Chevrolet in the same month slid from its meager 1% market share. The Chevrolet line-up in India consisted of:
Chevrolet Spark (3.73 Lakhs onwards)
Chevrolet Beat (4.11 Lakhs onwards)
Chevrolet Sail Hatchback (4.93 Lakhs onwards)
Chevrolet Sail (5.59 Lakhs onwards)
Chevrolet Enjoy (6.54 Lakhs onwards)
Chevrolet Tavera (8.64 Lakhs onwards)
Chevrolet Cruze (15.51 Lakhs onwards)
Chevrolet Trailblazer (24.7 Lakhs onwards)
The product range looked good on paper with an offering in almost every segment. The star category in India right now, the compact SUV, is where Chevrolet was missing though. There were media reports of a car to be launched in the segment by the end of 2017. It was to be named Chevrolet Adra. Alas, it’s too late now.
The pricing of existing cars was in line with competition. The spark was pitted against the ever popular Alto, Beat was supposed to eat into the market of Hyundai i10 & Sail was priced a tad above the Maruti Suzuki Baleno. If all of its competing brands could register double digit growth, why was Chevrolet’s market share moving southwards? Despite launching early in India, GM has struggled to boost its sales and market share in part because it has failed to launch low-cost yet feature-rich vehicles that Indian buyers prefer, according to analysts. Many of them also blame the high cost of maintaining and servicing Chevy cars for deterring cost-conscious buyers in India.
Knee jerk reactions also blamed the “Make in India” program. Quoting a News 18 report: “The decision was announced as part of a series of restructuring actions from the Detroit automaker and marks a significant blow to India's strategy of encouraging domestic manufacturing”
However, Stefan Jacoby, GM's chief of international operations clarified, saying "We are not giving up benefits India offers as a local cost manufacturing hub with an excellent supplier base which is extremely competitive" It turned out that GM will shut down just one of its plants and will even continue its IT hub in Bangalore. GM’s exports from India had doubled last year to 70,969 vehicles. GM India exports mostly to Mexico & South America.
Government policies for foreign car makers were questioned once again. Elon Musk’s tweet on 22nd May added fuel to the fire (and broke a thousand hearts in India)
However, a global perspective shows that the Detroit car maker is in trouble not just in India. In the last one year it has exited 5 countries including South Africa. Surely, India cannot be blamed for those fiasco's.
The Indian market is not easy to operate in. Maruti & Hyundai have a combined market share of 65%, but more importantly have cracked the code of making quality cars (read low on maintenance) at an affordable price.
The Indian market has seen three unexpected bonanzas in the past 2 months. Huge discounts were offered after the BSIII ban on passenger vehicles, then for clearing stocks before the GST regime kicks in & finally on Chevrolet exiting India. The discounts for Chevrolet vehicles are unbelievable though. There have been unconfirmed reports of “Buy 1, Get 1” offers, a first for cars in the Indian market!
Meanwhile Riteish Deshmukh made a last ditch effort to sell some cars with this tweet using the hashtag #ProtectYourPrecious
In retrospect, the hashtag looks like a campaign for some insurance firm. Claiming insurance is the only way unhappy Chevrolet car owners can make some money, if they don’t want to sell their cars for scrap.