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GM big idea on small car
- $300 m set aside for second plant

Mumbai, Aug. 3: General Motors, the world’s largest carmaker, plans to roll out a small car in India from its brand new plant in Talegaon, Maharashtra.

GM today announced that it would invest $300 million (Rs 1,350 crore) to set up a 300-acre automobile manufacturing facility in the state. This will be the second GM plant in the country — the first was established at Halol in Gujarat and makes mid-sized sedans like the Aveo and the Optra, and the sports utility vehicle Tavera.

“Although we will introduce small cars at our existing plant in Halol in the second quarter of next year, the new plant will produce greater volumes,” said Nick Reilly, president of General Motors Asia Pacific.

The plant will have an initial production capacity of 1.4 lakh vehicles a year. It will be ramped up if the demand surges.

“We are also expanding capacity at our Halol plant from the existing 60,000 vehicles per year to 85,000 vehicles per year. Thus, with the new plant, our manufacturing capacity in the country will quadruple to 2.2 lakh vehicles a year,” said Reilly.

The construction of the 120-hectare facility will begin at the end of this month. It is expected to be completed within 20 months. Production is scheduled to begin in the third quarter of 2008. The plant will employ more than 1,000 people at the outset.

GM officials refused to say which brand of small cars they plan to produce but the speculation is that it will be the Spark.

“Small cars represent the largest market segment in India and we do not foresee that to change. With increasing incomes, more first time car purchasers will buy these cars,” explained Rajeev Chaba, president and managing director, General Motors India.

“Thus, we will start the plant with small cars and introduce other cars gradually. We are in the process of launching other Chevrolet cars in the country,” said Chaba.

“Though our sales in the country has grown substantially in the last three years, we still remain a small player in terms of market share,” said Reilly.

“However, our new facility will enable us to continue the rapid build-up of our presence in one of the fastest growing and potentially the largest market in the world. We cannot remain a global industry leader without a strong presence in high-growth vehicle markets around the world like India,” he added.

“With increased production capacity and our entry into the small car segment, we expect to achieve a market share of 10 per cent by 2010,” added Reilly.

The existing GM India plant at Halol was originally built by Hindustan Motors and assembles the Chevrolet Tavera, Optra, the Optra hatchback and the Aveo.

In 1994, GM India had entered into a 50-50 joint venture partnership with Hindustan Motors and modernised the 45,000 square-meter plant. In February, 1999, GM bought the holdings of Hindutan Motors and GM India became a 100 per cent subsidiary of General Motor Corporation of the US.

General Motors India has reported a 37 per cent increase in domestic sales at 2,450 units in June this year against 1,866 units in the same month last year. The company has sold 1,302 units of multi-utility vehicle Chevrolet Tavera, 309 units of sedan Chevrolet Optra and 839 units of the mid-size Chevrolet Aveo during the month.

GM India expects to notch up sales of 45,000 vehicles during the current year against 30,000 units last year. “We expect to sell 75,000 automobiles next fiscal,” said Chaba.

Tata-Fiat target

The joint venture between Tata Motors and Fiat will start commercial production of passenger vehicles by December next year and said they have already invested Rs 214 crore in the venture.

Tata Motors managing director Ravi Kant today held discussions with Maharashtra chief minister Vilasrao Deshmukh regarding the project, an official release said. The state has assured total cooperation for the project, for which the Tatas have already invested around Rs 214 crore, it said.

The auto giants recently announced this 50:50 JV for manufacturing passenger vehicles for both companies, engines and transmissions for their Indian and overseas markets.

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