On June 1, news broke out the world over that General Motors had filed for bankruptcy in a court in the United States. That day, General Motors India President & Managing Director Karl Slym gave almost a dozen television interviews. Phone calls from the media, dealers and vendors kept pouring in right through the day. By the end of the day, Slym was tired but unruffled. For several weeks he had prepared himself and his team for such an eventuality. The crisis plan was set in motion right away.
Apart from telling one and all that it will be business as usual for the company, General Motors India launched an advertisement campaign with the tagline, There for you, there for India, along with a picture of Slym. Trying to explain the nitty-gritty of the bankruptcy to customers will not click, Slym felt. What was needed was an assurance that the Indian company won’t down its shutters. The company did have a brand ambassador, film star Saif Ali Khan, but this was a serious situation and it was decided that Slym alone will be able to drive the message home.
General Motors is not a big player in India, though it has six products in the market: Cars Spark, U-VA, Aveo and Optra and utility vehicles Tavera and Captiva. At the end of 2008-09, its share of the 1.55-million market for cars and utility vehicles was less than 4 per cent sales were down 7.54 per cent during the year.
But it thinks it can grow in India. In China, a market not very dissimilar to India, it is the largest car company. It does have strengths in small cars which account for three-fourths of the Indian market. The stakes are too high to let the business drift.
General Motors had been in pain in the US for a while. And Slym was no stranger to the company. In October 2007, he took over the reins in India. Anticipating the worst, Slym began to take corrective action almost a year back. “What exercises a customer in such a scenario is what will happen to spare parts and service, will the car still have re-sale value”. These were the issues he knew he had to address.
In the last one year, dealerships in India were raised by almost 100 per cent to 203. Another 50 are likely to open this year. Several of the new dealerships are low-cost ones which require less investment in towns. Some of these are owned by large General Motors dealers. This has helped the company reach its cars to a larger population and address the spare parts and service issues. In addition, it has joined hands with state-owned Bharat Petroleum to set up service stations at some of its large outlets.
Since these low-cost dealerships have smaller showrooms (sales here are driven by Chevrolet Spark and Tavera) and do not stock extreme specialty tools, they can break even once they sell 15 to 20 cars per month. Almost 80 per cent are already profitable. It takes six months to get these volumes. General Motors has also initiated a rural push for its dealers in Gujarat, Maharashtra, Punjab, Tamil Nadu and Madhya Pradesh.
The CEO had also devised a scheme where the company gave three years of free service on the Spark. Buyers of other cars could purchase this service. It also guarantees a maximum expenditure on service for three years on any car (Spark: Rs 12,999; Aveo: Rs 15,999, Optra (petrol): Rs 17,999, for instance) anything in excess the company promises to reimburse.–