Can this man save GM India?
Kushan Mitra & Rishi Joshi July 13, 2009
Karl Slym, the General Motors India MD, is a tornado of activity, delivering vehicles to consumers and starring in media campaigns. Will this be enough to save his company?
The five-year business plan is over,” says Karl Slym, Managing Director of General Motors (GM) India. “Nowadays you make 15-minute business plans and hope you don’t get another surprise later,” jokes Slym.
What Slym is obliquely referring to is an event that is no laughing matter for GM subsidiaries worldwide — namely, the bankruptcy of the US operations of General Motors, once the world’s largest carmaker, recently bailed out by the Obama administration to the tune of $14 billion (Rs 67,200 crore).
The car maker has been forced to spin off its European operations to a consortium led by Canadian parts manufacturer Magna, flogged Saab to Swedish supercar maker Koenigsegg and is trying to sell sports utility vehicle brand Hummer to the Chinese. As part of its settlement, GM will not be able to send any ‘rescue funds’ to any of its international operations.
This begs the next most obvious question: Can GM India survive with an ailing parent? “The Indian car market is still an exciting place and honestly we are fully insulated from the troubles in the US,” adds Slym. Are they though? After all, Indian consumers still carry raw wounds from being burnt by Korean car maker Daewoo, which was forced to retreat from the Indian market—along with its immensely popular Matiz—because of a bankrupt parent, leaving behind loads of Matiz owners who couldn’t service their cars or purchase parts. Anyone surfing the Web for information on cars, as today’s consumers are wont to do, will instantly unearth a pile of unflattering articles that link GM with bankruptcy—and raise, in their minds, the spectre of holding onto a car whose manufacturer has already fled the country. Slym himself confesses that “Indian car buyers are a bit jittery, after the Daewoo Motors incident”.
Consequently, Slym has been on a non-stop whirlwind tour of GM India’s various constituencies, repeating the gospel that despite a broke parent, GM India is here to stay. “Last week I was in Bangalore and Ahmedabad. The week before that I was in Pune, Halol and Jaipur. I must admit, driving to Jaipur was a bad idea,” he laughs. Slym’s focus is now on customer service with a personal touch. Slym recounts how he personally delivered a vehicle to a customer in Ahmedabad who was the first in his family to look beyond a Maruti. “We feel that we make cars that people want to own,” he says.
Even if that were the case, Slym— and GM India—would be on much more solid ground if GM were a blockbuster seller of cars in India. That, unfortunately, is far from reality. The company was able to sell only 61,524 vehicles in 2008-2009 at a 70 per cent plant capacity—less than a tenth of market leader Maruti Suzuki, which sold 7,22,000 vehicles. “We are the upstart here,” Slym concedes. “When people wake up and decide to buy a car they automatically think of Maruti, which has the advantage of experience, brand and reach. But we are trying to change that by offering Indian consumers a new set of experiences.”
Curiously, the problem with GM India today seems to be its ambition. The company has considerably ramped up capacities at its Talegaon and Halol plants near Baroda, Gujarat to produce 2,25,000 vehicles today— a whopping1,60,000 more than last year. Even if it runs at the current 70 per cent capacity utilisation, it absolutely must sell 2.5 times its current unit sales to justify its investments of well over $1 billion (Rs 4,800 crore) up to now. This will be like pulling a rabbit out of a very small hat. Moreover, when GM decides to invest in the Talegaon plant’s second phase, it will then need to be able to put 3,85,000 cars on the road—a trick that even Houdini would be proud of considering GM’s current market position.
Naturally, Slym has realised that he better roll up his sleeves and get to work—and he’s done so with the brio of consummate salesman. GM India’s MD has become the firm’s star campaigner on the company’s media roadshows. The firm’s advertising blitz comes with the punchline “There for you, there for India” with Slym featured as the firm’s brand ambassador. It doesn’t end there. Slym has been meeting with suppliers, employees, dealers, business partners and above all, customers, to allay their fears about a dying company. Has it worked? According to the company, there has been no significant drop in bookings in India so far. In fact, GM India’s recent performance will give Slym and his team a boost: While the company didn’t share any numbers with BT except to say that it was profitable, the company’s unit sales grew 10 per cent last fiscal despite what was an annus horribilis for the industry. It expects to sustain that growth in 2009-10 as well.
This may not save GM India. What could, however, is a varied and bountiful product line. Its small car, the Spark, has had moderate success— Slym says that the car is profitable despite massive discounts (upwards of Rs 50,000) — and their utility vehicle, Tavera, is the wheels of choice for call centre transport operators and the tourism industry. In September, the company plans to launch the Rs 12-15 lakh Chevrolet Cruze, followed later this year by another small car, Still, these products will go nowhere without niggle-free owner experiences and top-notch servicing.
Despite the considerable challenges that GM faces in India, Slym says he would rather be here than anywhere else. “Would you want to be in a stagnant market or one that is really exciting? Given the situation, I am very happy where I am and with what I am doing and I love India,” he says. Will Indians feel the same way about his cars?