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 GM Proceeds With India Plan, Unaffected by Slowdown (Update2) By Vipin V. Nair and Bernard Lo Dec. 1 (Bloomberg) -- General Motors Corp., the U.S. automaker that faces the risk of running out of cash, will go ahead with investment plans in India, notwithstanding a slowdown in the local market. ``Emerging markets are the obvious growth areas for the auto industry,'' Karl Slym, managing director of GM's Indian unit, said in Bloomberg Television interview in New Delhi today. The company's plans for India ``remain solid.'' GM is building factories in India and Thailand to counter declining sales in the U.S. The company's board has been meeting in Detroit to discuss a rescue plan to present to Congress in two days that may determine if Chief Executive Officer Rick Wagoner can save the company and keep his job. The company, which has invested $1 billion in India, has two factories in the country with a capacity to produce 225,000 vehicles every year. It is also spending more than $200 million to set up an engine plant. GM plans to raise the capacity of factories in India to 300,000 cars a year. ``Our activities are already funded and we move ahead with our plan as it is,'' Slym said. That contrasts with Honda Motor Co., which is delaying a second factory in the country because of waning demand. Sales Slow GM said last month it will fall short of its India sales target this year as higher loan rates and slower economic growth damp demand. The automaker now expects to sell as many as 78,000 vehicles in the country this year compared with a previous target of 90,000. Sales totaled 60,032 vehicles last year. Still, the Detroit-based automaker expects to more than double its market share in India to 10 percent by the end of 2010, Slym said. The company had a 3.8 percent share in the fiscal year ended March 2008. Nationwide car sales have fallen in three of the past four month on higher interest rates and rising job insecurity. Tighter lending is also damping sales as 80 percent of Indian buyers purchase vehicles on credit, Slym said in a separate interview. ``Credit is not available,'' he said. ``That really is a problem.'' The government should cut interest rates and encourage state-controlled lenders such as State Bank of India, the nation's largest, to ease lending, Slym said. Slowing demand in the world's second-fastest growing major economy puts at risk a government forecast of annual car sales tripling to 3 million by 2015. That goal has attracted a combined $6 billion of investments from GM, Ford Motor Co., Volkswagen AG and other carmakers. Prime Minister Manmohan Singh said Nov. 15 the global economic slowdown would cause India's growth to slow to between 7 percent and 7.5 percent in the year to March 31, from an average of about 9 percent in the previous four years. To contact the reporter on this story: Vipin V. Nair in Mumbai at Vnair12@bloomberg.net. Last Updated: December 1, 2008 04:08 EST |
