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It's business as usual for GM India

June 16, 2009 01:58 IST
"Just media hype," said a relieved Sachin Kumar, executive of the Auto Vikas showroom of General Motors India in West Delhi's Moti Nagar. "There were some showroom queries on the first two days, but it died down."

If prospective consumers of GM's cars are visibly disturbed by the news that its United States parent has declared bankruptcy and filed for restructuring, it isn't apparent over here. All showroom staff have been directed to wear big badges with a 'There for you, there for India' logo. And zonal executives have been told to visit individual dealerships to directly tell customers that all's well and will continue to be so for GM India and its products. But the need doesn't seem pressing, given the scene at dealerships through the big cities.

"There has been a dip, about 15 per cent," said the manager of a Mumbai showroom, of the fortnight since the news of the giant's fall. But no cancellations. Enquiries are still flowing in."

The Detroit automaker filed for Chapter 11 bankruptcy protection on June 1 -- the largest auto industry bankruptcy in history.

The automotive industry in India has been going through a rough patch. The worst sales slump in eight years saw top automakers like Tata Motors and Mahindra & Mahindra cut production. Subsequently, government stimulus measures sparked a recovery, with car sales climbing for a fourth month in May and foreign car firms launching new models for India.

GM, which is dropping high profile brands, including its Hummer, Saturn and Saab brands, is now betting heavily on small cars and expanding in countries like India via new brands and local sourcing. It has 192 showrooms in the country and sold 61,526 cars last financial year.

"A few of our customers did cancel earlier bookings, but many others don't seem much aware of it," said the sales manager at Sundaram Motors, a long-time dealer in Bangalore for GM, one of two in the city. "Sales have been normal for the past 10 days."

"There was some apprehension in customers initially," admitted J K Singh, at Kolkata's India Automobiles' showroom. "But things improved after the company held press conferences and confirmed its India investment plans and launches were on track."

Added Rajesh Sanei, director of Dulichand Motors, another leading GM dealership in that city, "Customers are mostly concerned about spare parts availability, and we tell them we are maintaining ample stock and can refill as and when required from the plants."

"We are booking six-seven cars on an average every day and there has been no significant drop in bookings since December. Though, footfall is down by 5-10 per cent," said Sanei.

It helped that GM prepared the dealerships before the formal announcement. They were told of what was in the offing and what it meant and how to address the queries. Notably, for instance, they were told that no service warranty was being withdrawn, that the earlier planned launches of the LPG variant of the Spark, the Chevrolet Cruze and the Beat mini-car would all be held as planned, that the company was here to stay. And, that the Chapter 11 bankruptcy filing was meant to restructure and shed flab, to resume business, not to shut down.

"They assured us that there will be no supply problems for any spare parts or any other maintenance issue relating to the vehicles. And that GM India will continue to work, just as earlier," said the Mumbai dealership. "That they've invested more than $1 billion in India and are here to stay."

But what about the customers?

"When there were queries, we explained the difference between bankruptcy filing in India and the US, that this is meant to prevent closure. And on all the plans and launches for the Indian market," said Shashank Immanuel, sales executive at Delhi's Vardajyoti Automobiles. The giant displays in showrooms, on the three-year warranty or free maintenance for 100,000 km, unmatched by either Maruti or Hyundai, do help. And the tubeless tyres' offer.

"That three-year, no maintenance cost service on the Spark gets a good response," said a manager at Bangalore's Sundaram Motors. Each Indian dealership, said Kolkata's Sanei, keeps 150-200 cars in stock and that helps, too. More so, the 30-day stock of spare parts, something the company re-emphasised in the run-up.

At the moment, the Chevrolet Spark, the Aveo and the U-VA are the most sought after, says Kolkata's Sanei. His dealership booked 108 cars last month and the daily average pace has continued.

"It is the service back-up and spare parts that prospective buyers have on top of their minds, not the US news," says the Mumbai dealership, which sells around 100 cars a month. That gives their sales people a chance to pour out all the reassuring data.

"The average customer who comes to buy a Spark or to ask about a Tavera seems to be either ignorant about the Chapter 11 filing or has forgotten about it," said Auto Vikas in Delhi. "Only a few of our customers have cancelled their bookings and others don't seem much aware (of the US news)," echoes Sundaram Motors in Bangalore. "Overall, it's normal sales for the past 10 days."

"We tell everyone that the company sees India as a major market for growth," say executives at the Mumbai dealership. "The idea is that people, sooner or later, come to see GM India as part of the 'Good GM' unit."

BS Reporters