US vehicle manufacturers General Motors Company (NYSE:GM), Fiat Chrysler Automobiles NV (NYSE:FCAU) and Ford Motor Company (NYSE:F) have been forced to put aside their plans to launch a new platform in India so that they can revisit their India investment strategy.
The decision to go back to the drawing board was encouraged by the sales results for GM in India which dropped by almost 40% towards the end of the first quarter this year. The same has also been happening to Fiat Chrysler and Ford who have also been experiencing slow performance in the Asian country.
Culprits affecting the India investment
India is currently one of the fastest growing markets and it is therefore very attractive to investors and foreign firms. However, the three firms have been having a hard time trying to make satisfactory sales in the country. This is because Indians have their unique taste in automobiles. It is often hard to convince the Indian market to start buying their models. The government despite its intentions to make the country more attractive to foreign manufacturers has been enforcing regulations that have been quite stringent on the foreign vehicle manufacturers.
GM has planned to launch a $1 billion global emerging market platform but the current situation in India has caused the company to delay its plans in the country. It will, however, introduce the platforms in other emerging markets. Ford has been planning to launch an R&D center near Chennai so that it can supplement the company’s vehicle portfolio in the country.
Fiat Chrysler stated that the automobile industry in India is currently in a suspended verdict especially due to uncertainty over diesel models. This has affected the firm’s business in the country. The National Green Tribunal (NGT) and other organizations claim that diesel has a bigger pollution footprint and have been discouraging its use. The three companies, therefore, feel that it is not the ideal time to roll out their India investment.