‘Unprecedented regulatory uncertainty’ forces GM to hold $1-bn India investment

US auto major General Motors has put on hold its planned $1 billion investment in India and is reviewing its future product plan for the country due to “unprecedented regulatory uncertainty” and change in customer preferences.

“...we are conducting a full review of our future product program in India. GM will continue with its next family of vehicles in global growth markets. However, the sourcing of components for India is being put on hold at this time while we conduct a full review of our future product program,” a General Motors India spokesperson said.

“As a result, we are also putting on hold future investment in our all-new vehicle family in India until we firm up our product portfolio plan. GM continues to monitor the Indian market and will evolve its product strategy accordingly,” the spokesperson added.

Last year, the company had announced a turnaround plan for India entailing fresh investment of $1 billion and ceasing production at its Gujarat plant to consolidate manufacturing operations in Maharashtra.

However, in June the company said that it would continue production from its Halol plant in Gujarat until March next year, even as it continues to review future options, including sale of the facility.

As per the company’s plans announced last year, the Halol plant was supposed to stop production by the second half of 2016. The move would have affected 1,100 employees at the plant that has a total annual manufacturing capacity of 1.1 lakh units.

The company’s move was reported to have been rejected by the Gujarat government which demanded a concrete settlement plan for the workers.

“India is clearly a dynamic market and customer preferences have indeed shifted. The SUV segment is growing rapidly while the MPV segment is contracting. In addition to the shift in customer preferences, the industry is facing unprecedented regulatory uncertainty,” the spokesperson said.

Like the company’s competitors, General Motors is also paying close attention to how this impacts its business, the spokesperson added.