GM will stop production at the Halol plant and consolitate operations at the Talegaon plant in Maharashtra, the carmaker has said.
In 1996, General Motors was one of the first automobile companies to set up a manufacturing plant in Gujarat. Since then, the state now boasts of being home to Tata Motors, Honda Motorcycles, Maruti Suzuki, Ford India, and Scooter India, with Hyundai India, Honda Cars and Force Motors likely to set up plants in Gujarat in the foreseeable future.
A report in Mint said that “in the last seven years, the state has seen investment proposals to the tune of Rs 20,000 – 25,000 crore in the auto sector.” Another Rs 15,000 crore in Gujarat's car-making sector is expected to be pumped in over the next few years.
India's largest carmarker, Maruti Suzuki is alone investing nearly Rs 4,000 crore in the state, with a car-making capacity of two million. The facility is expected to be up and running in the current fiscal.
According to a report in the Economic Times, "A 120-130 km belt comprising Sanand, Hansalpur and Vithalapur, with connected nodes of Kadi and Halol, is well on its way to be among the biggest automotive clusters in the Asia-Pacific region. Some 2.2 million passenger vehicles are expected to be produced in the region in the next six to eight years by Maruti, Tata Motors, Ford India and Honda Cars India. Hero MotoCorp and Honda Motorcycle & Scooters India are considering factories to manufacture two-wheelers."
Now that General Motors has announced its plans to launch 10 new India-made vehicles in the next five years, and expand India into a manufacturing and export hub for emerging economies, with an investment of $1 billion in the next few years, it has also decided to cease production in Gujarat which is fast emerging as India's Detroit.
It is strange that the company would decide to stop production at its first manufacturing plant, with which it entered into India, at a time when it's actually also looking to increase its annual production. The Halol facility has an annual capacity of 1,27,000 units and employs around 1,100 people.
So why is GM doing this?
In an interview with Economic Times, GM's CEO Mary Barra said, that choosing the Talegaon plant was natural for the company as, between the two, it is the bigger unit and nearly 70% of their suppliers are situated around that plant.
After shutting manufacturing at the Halol plant, the company will consolidate its operations at the Talegaon plant, and even double the output from there. The Talegaon plant currently has an annual manufacturing capacity of 1,65,000 units; it also has an engine manufacturing unit, which churns out 1,60,000 units per year.
In another interview, with Mint, she said, “...the rationale about ceasing operations in Halol, Talegaon is a new plant and it is closer to our engineering centre (in Bengaluru). Talegaon has a powertrain plant and with that we want to focus on one location to make out business.”
However, she also laid to rest speculation that the company was shutting the plant. She clarified that General Motors wasn't shutting the plant, but ceasing production.
“...Gujarat will remain one of the hubs for suppliers. We will not give up the supplier relationship that we have in Halol. We will integrate them with our operations”.
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