0: Over the last 20 years, the Indian automotive market has grown from

4: about 500,000 new passenger cars, hatchbacks, sedans and utilities to

9: about 3.5

11: million in 2018.

14: The market has an expected compound annual growth rate of about 5 to

18: 6 percent over the next 10 years.

20: But, some automakers have struggled to make it work.

24: Among them is General Motors, the largest U.S.

27: car company. GM stopped selling cars in India in 2017 after years of

33: declining market share.

34: It's a striking move for GM, which in recent years has also closed

38: shop in other regions around the world, as leadership focuses on

41: maximizing profits and making investments in new technologies such as

45: electric power trains and mobility services.

49: With a population of more than 1 billion people, India is becoming

52: one of the world's largest automotive markets.

54: The country is poised to surpass Japan as the world's third biggest

58: new car market in 2021.

61: So while there is ample opportunity for automakers, the Indian

63: landscape has been particularly difficult to navigate, especially for

67: American firms. GM watched its share of the Indian market erode

71: steadily over several years, bottoming out at about one percent in

74: 2016 just before the automaker pulled out.

78: So if the Indian market is growing, why did GM struggle, especially

81: when GM has been so successful in China?

90: To be fair, quite a few automakers tend to have difficulty in the

93: Indian market. First of all, India is a massive country with a

98: diverse population of roughly 1.3

101: billion people.

102: India, I think, we are definitely a complex market.

105: The income levels are quite heterogeneous.

108: We are divided, actually into urban India and rural India.

112: The consumer requirements are actually different even the needs are

115: different in both these markets.

117: There are a few criteria a mass market automaker ought to meet.

122: They are fuel efficiency, resale value, proximity of service stations

126: and the affordability of parts and low servicing costs.

129: I think first thing is price.

131: We are a country with a very low per capita income.

134: Indians are very price sensitive.

136: But price is not the only factor.

138: So now the customer also needs some more value, for example, with

141: styling elements. And then, I think, the consumer also wants a global

146: brand. They want a brand which is aspirational.

149: The consumer wants an overall combination of all P's, you know it may

154: be product, it may be price, it may be positioning.

156: Which makes the things quite complicated for OEMs.

160: These might seem pretty attainable, but many automakers have

162: struggled to meet these in the country.

164: There are a couple of companies who have managed to crack that code

167: and there are several more with shares of the market ranging in size

170: from small to smaller.

172: By far, the most successful automaker in India is the Japanese firm

176: Suzuki, which alone owns half the Indian market.

180: Suzuki has enjoyed something of a first mover advantage.

183: It was the first major automaker to enter India, and it did so

187: through a joint venture with Indian manufacturer Maruti.

191: Suzuki also specializes in highly fuel efficient vehicles, which are

195: extremely important in the Indian market.

197: After Suzuki, Korean maker Hyundai is the second largest with 16

201: percent of the Indian market.

204: After that, Indian, Japanese and Korean makers such as Honda, Tata,

209: Kia and Mahindra all more or less have equal degrees of market share.

213: Kia in particular, is a relatively late coming brand that has been

217: able to succeed in India.

219: I think an excellent example is Kia Motors which recently entered, it

224: was a new brand and they gave a great proposition.

227: They were in an SUV segment and I think suddenly right from the month

231: one, we saw a great success for this OEM, in India.

235: Then the remaining 10 percent of the market is made up of others such

238: as Ford, Renault, BMW and Nissan.

244: Early on, GM entered the India market with its Opel brand, a mass

248: market brand GM had owned in Europe.

251: While Opel cars tended to be affordable, they failed to resonate with

255: Indian buyers.

256: I think later on they realized that's not a brand which is really

259: going to work well in India because that was not a value proposition

263: which they were offering to their customers.

265: But then GM introduced its Chevrolet brand to the country, which

269: brought it more success.

271: It was a great success.

272: They launched a few great products like Chevrolet Cruze Chevrolet

275: Beat. They had that start which they were really looking forward.

279: Despite these efforts, the automaker had trouble taking share in the

283: Indian market. It was the first automaker to introduce a diesel fuel

287: powered car of its size.

289: At the time, the Chevrolet beat was the smallest diesel powered car

293: customers could buy in India.

295: It was a strong proposition and benefited from a government subsidy

299: on diesel engines.

300: But in the end, the diesel Beat had few takers.

304: The company may also have made a misstep by trying to introduce a

307: low-cost vehicle GM manufactured with its Chinese partner SAIC called

313: the Chevrolet Sail.

315: Their plan got derailed with the introduction of Sail because I think

319: they underestimated the consumer aspiration and then, I think, the

323: decline started. GM also fell victim to a kind of self-reinforcing

328: cycle. One challenge it struggled with was the lack of an adequate

331: dealer and servicing network.

334: More premium brands such as Mercedes and BMW often attract customers

338: with the means to travel further for service and sales.

341: But, mass market brands such as GM's Chevrolet are targeting middle

346: class buyers who value convenience.

348: Dealerships in India often sell a single brand so GM's low sales

352: volumes meant a single dealer might sell only a handful of cars in a

356: month and risk taking losses on the costs of running the business.

360: In the end, such low market share made it difficult for GM to justify

364: maintaining a presence in the country.

366: The automaker officially stopped selling cars in India on December

370: 31, 2017.

374: GM told CNBC it explored many options for its India business, but

379: ultimately withdrew after it determined the increased investment

383: originally planned for the country would not deliver the returns of

386: other global opportunities.

388: It continues to operate services for existing Chevrolet customers in

391: the country. In September, the automaker entered a long-term

395: partnership with Tata Consultancy Services, which will do engineering

398: design for GM vehicles meant for markets around the world.

402: The move out of India was part of a larger pullback GM has been

405: making around the world as it restructures its business.

408: We're seeing other automakers follow suit as they're pruning.

411: They're pruning the dead branches and focusing on where they can be

415: strong. For GM, this is a huge shift because GM of old used to be all

421: things to everyone everywhere.

424: And, it has now decided that is not the proper strategy.

428: The automaker told CNBC if it doesn't see a clear path to leadership

432: and long term sustained profits in a particular market, it will look

435: at opportunities to focus its resources on areas that will lead to

438: the greatest results. It added that this is the same approach it has

442: taken elsewhere.

444: The automaker also sold its European operations to French carmaker

448: PSA in 2017.

450: At the time it pulled out of India GM had two factories there, one in

454: the Gujarati city of Halol and another in Talegaon.

457: The Halol plant was acquired by MG Motor, the once famed British

463: brand now owned by Chinese automaker SAIC Motor Corporation.

467: GM has a joint venture with SAIC to produce cars in China.

472: Reports surfaced in November 2019 that SAIC is also in talks to

476: acquire GM's Talegaon plant, along with fellow Chinese automaker

481: Great Wall. GM told CNBC it is exploring strategic options for the

486: plant. The move out of India was a retreat for GM and for American

493: auto industry. Ford is starting to do the same.

496: It's trimming some of its offerings.

498: Global economy and global auto market is slowing some.

501: Certainly true here in the US, it's true in China.

504: There's just not enough money to go around to every single market,

507: too every single vehicle line.

509: Look at Daimler and BMW, they've announced major employee cuts.

513: But in some ways it might have been a shrewd move.

515: The other thing that is happening in the market that has never

518: happened before is we are on the verge of massive disruption of the

522: industry. You know, we're going to have a future of electric

525: vehicles, autonomous vehicles and new ways to acquire personal

528: transportation and now mobility service.

530: There's all kinds of things.

532: Nobody knows when that's going to happen or how it's going to happen,

535: but it's requiring a lot of investment.

538: Companies like GM just can't keep putting a ton of money into the

542: future as well as a ton of money in today's stuff.

545: While analysts do expect the Indian automotive market to continue

549: growing in the foreseeable future, it did hit a slump in 2019.

554: Maruti Suzuki sales were growing until February 2019, but have

558: slipped every month, year over year, until October.

561: Suzuki said in November that the slowing Indian market was one of the

565: factors behind the company's falling overall sales and net income in

569: its second fiscal quarter.

571: So I think right now the market is going through turmoil.

573: Our economy is struggling and if we only talk about the automotive

577: market we are talking about a decline of minus 14 percent in 2019

582: calendar year light vehicles.

584: So obviously this year is the kind of degrowth happening, which has

588: not happened in last two decades, in India.

591: 2020, we are just talking about a kind of a flat growth but then

595: going forward, in 2021, '22, '23, the assumption that our economy

601: should be back, you know, the GDP growth rate will start growing

604: above seven percent. Indian

606: automotive analysts note the country's auto industry has to contend

610: with the relatively recent rise of mobility services such as ride

614: hailing. The potential of these competing technologies is still

617: unknown, but could affect how interested in car ownership Indians

621: remain in the future.

623: In the end, GM did make some of the right choices when trying to go

627: into India. GM was right in terms of localizing their products

633: typically for the Indian market, making it, in line with the taxation

637: because they were able to save tax.

638: But, at the end of their day, were really not able to match with what

642: the competitors were offering.

644: If the Indian economy picks back up, GM may find itself trying to

648: profitably re-enter the country.

650: GM's rival Ford, which has been in India since 1995, said in October

655: 2019 it will create a new joint venture with Indian manufacturer

660: Mahindra, which Ford said will help it develop new products faster

665: and drive profitable growth.