GM invests $200 million in powertrain plant in Maharashtra, seeks to increase market share

General Motors (GM) Corp, which aims to increase its market share to 10 percent by 2010 in India, has announced that it will ramp up its manufacturing facilities by investing more than $200 million in a powertrain plant in Talegaon, Maharashtra.

The facility, expected to be complete by the first quarter of 2010, will have an annual production capacity of 160,000 units that can be expanded to 300,000 units, GM said in a statement.

GM's auto plant in Talegaon is set to be operational this week and around 140,000 vehicles are expected to roll out every year, taking GM's all-India annual capacity to 225,000 vehicles.

The company has a plant in Gujarat from where it makes the Chevrolet-badged Tavera, Optra, Aveo and Spark and a technical center, including a design studio, in Bangalore. It imports the popular sport utility vehicle (SUV) Captiva.

Karl Slym, president and managing director of GM India, said the company is working on the design of its new small car, which it plans to launch in 2009.

The company has plans to roll out the small car from its new plant at Talegaon, Slym said, adding that the small car will be sold in India and exported to other emerging markets.

"The Talegaon engine facility is an important component of GM's global strategy to establish a strong presence in this market. This is just one of a number of investments, totaling more than $1 billion that GM has made over the course of the last few years in emerging markets around the world such as China, Korea, Russia and India," Slym said.

"We cannot remain a global industry leader without a strong presence in the high-growth market of India. The new facility will enable us to continue expanding our product line-up in India," Slym said, adding that the launch of the small car will enable the company "to capture more opportunities in one of the fastest-growing vehicle markets in the world."

The small car will not compete with Tata Motors' Nano, which is being touted as the world's cheapest car with a price tag of $2500.

According to market data, India sold about 1.4 million four-wheelers last year compared to 5 million in China and over 10 million in the US. Annual passenger vehicle sales are forecast to rise to 2 million units by 2010 and Indian car sales are expected to more than quadruple to $145 billion by 2016, with small cars accounting for more than two-thirds of sales.

However, GM is not alone in this emerging small car market. Other automakers have also expressed interest in developing and marketing the small car in India.

With India's middle class population growing in number, several automakers including market leader Maruti Suzuki, South Korean Hyundai Motor Co. and India's Tata Motors have begun focusing on the low-cost small car segment.

In January, Tata Motors launched Nano, which is expected to give stiff competition to Maruti Suzuki's existing line-up of small cars like Maruti 800, Alto, Wagon R and Zen Estilo. Hyundai Motor India Ltd. also came out with its compact car called i10, and plans to launch an upgrade, the i20, later this year.

In May, the Renault-Nissan alliance also announced that it has partnered with Bajaj Motors for launching a low cost car that will rival Nano by 2010-11.

Also entering the small car market is Japan's Toyota and its rival Honda, which have set up their second manufacturing plants in Karnataka and Rajasthan respectively to launch their small cars by 2010 and 2009. US-based Ford Motor Co. and Germany's Volkswagen AG also have shown interest in making small cars in India.