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Rediff.com  » Business » GM sets 'Sail' to beat India blues

GM sets 'Sail' to beat India blues

Last updated on: July 9, 2012 15:21 IST

GM sets 'Sail' to beat India blues

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Sharmistha Mukherjee in New Delhi

US-based General Motors (GM), may have tipped Japanese auto major Toyota to become the largest-selling car maker globally last year, but it has been finding the going tough in India.

GM's sales volumes in the domestic market remained flat in 2011 and has skid by 11 per cent in the first six months of the current calendar year.

The Detroit giant, which is betting big on the Indian market (touted to become the third largest in the world by 2020) is now overhauling the entire line-up of cars it has on offer in the country to take on competition and woo back consumers in a market which has seen sentiments soften on back of high interest rates and fuel prices.

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Photographs: Rick Wilking/Reuters

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Come September, GM would introduce premium hatchback Sail in the intensely competitive small car market in the country. The hatchback would be followed by an entry-level sedan on the same platform.

The new products would vie for market share with cars from the Swift and the Etios series, both of which have been game-changers for rivals Maruti Suzuki and Toyota Kirloskar Motor (TKM) respectively. While Swift and DZire account for over a fifth of overall volumes for Maruti Suzuki, with sales of 63,575 units, the Etios and the Liva notched up half the numbers for TKM in 2011.

Lowell Paddock, president and managing director, General Motors India (GMI), says the company will enter the premium economy segment with the Sail around the festival season this year.

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Photographs: Courtesy, Cardekho.com

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This segment has been growing strongly, and the company is quite confident that it has the right attributes to tap into the category. A sedan version of the Sail would follow around the same time.

The new cars from the GM fold have been positioned for launch in categories that recorded the fastest growth amid a slump in the automobile market in India last year. According to industry estimates, 39,000 premium compacts and 20,000 entry-level sedans are sold in the country every month.

Sail U-VA and Sail sedan would replace ageing warhorses Aveo U-VA and Aveo which has seen demand tapering over the last few months. In June, GM could hawk only 181 units of the Aveo.

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Photographs: Rediff Archives
Tags: Aveo U-VA , GM , Sail , India

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GM sets 'Sail' to beat India blues

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While a time-line has not yet been etched for a phase-out, the Optra too is fated to meet a similar end. "Like every other car, Optra also has its own life-cycle. This model is ageing, but still there is steady demand for the car in some parts of the country. We will take a call at a certain point of time to phase out this model too", Paddock adds.

GM has already introduced BS IV compliant Tavera, an upgraded Captiva and a new diesel Cruze over the last three months. An upgraded version of small car Spark and a new multi-purpose vehicle Enjoy would hit the roads by December this year.

The Sail, the sedan and the MPV have been developed by the company and joint-venture partner Shanghai Automotive Industry Corporation (SAIC).

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Photographs: Rediff Archives

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After all these changes, the company will have eight (out of nine) diesel cars in its line-up as compared to the five models it sells in India now.

The gap between petrol and diesel stands as high as Rs 28 per litre which has led to an increase of over 35 per cent in sale of diesel vehicles in the last financial year.

General Motors, which has gained significantly from strapping a one-litre diesel engine on small car Beat, however, has ruled out a diesel version of the Spark for now.

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Photographs: Reuters

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Paddock says "the economies of scale do not permit us to look at a smaller diesel car. But we will bring out an upgraded version of the Spark in the third quarter."

Spark sales have plummeted by a third to 614 units in June as compared to the 1879 units the company sold in March this year.

"The only way to create demand in a sluggish market is by introducing new and exciting products. The consumer is showing a preference for diesel vehicles due to the price differential between the two fuels. We are looking at entering new segments which are showing traction with both petrol and diesel offerings to build up volumes and grow with the market in the coming months", informs P Balendran, vice-president, General Motors India.

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Photographs: Reuters

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GM, which aims to treble sales to 300,000 units in India by 2013, is considering launching five new vehicles together with SAIC over the next 18 months.

The carmaker has two production plants at Halol in Gujarat and Talegaon in Maharashtra. While the Halol facility has the capacity to roll out 110,000 units a year, the Talegaon plant can manufacture 140,000 vehicles.

GM has a 50:50 joint-venture agreement with SAIC for running operations in all emerging markets in Asia. The GM-SAIC alliance operates eight joint-ventures in China and has also formed an investment company, General Motors SAIC Investment Limited, to facilitate expansion efforts.

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Photographs: Carlos Barria/Reuters

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General Motors India sold 111,150 cars in 2011, a mere 345-unit growth over the 110,805 units sold the previous year.

Between April and June this year, the company's sales declined by 19.43 per cent to 21,448 units as compared to the corresponding period last year.

The Detroit giant has surely got its task cut out.


Photographs: Carlos Barria/Reuters

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