GM buys India dream, to spend $500m more

The company’s timing is significant as it comes a day after Tata Motors suspended work on its Nano car project in Singur over land woes. GM India’s new investment plans conform to automaker’s optimism about investments in India, disregarding the current industrial slowdown.

The additional investment, spread over seven years up to 2015, will go into capacity expansion at Halol, setting up a new plant in Talegaon, including a powertrain unit.

“The company will invest half a billion dollar in India over next seven years to keep the growth momentum. A good part of this will go into the development of new models, including a small car next year, and upgrading the existing ones that will result in a new Optra in 2010,” said Karl Slym, president and managing director, General Motors India, at the launch of its utility vehicle, Tavera Neo 2. Maruti Suzuki India (MSIL), Hyundai Motor India (HMIL) and Ford India have also announced their plans for more investment.

Suzuki has earmarked an investment of Rs 9,000 crore in India, a good part of which has gone into setting up a powertrain unit that will make Suzuki’s K-Series or the next generation engines that would eventually be used in all global models. HMIL has invested Rs 1,210 crore in its second engine & transmission plant. This is part of Hyundai’s over Rs 4,000-crore investments in the country until 2013.

“Investment of such huge scales is on a long-term basis and is done taking into consideration the fluctuations that would happen in the future. Though the domestic market is sluggish at the moment there is a huge potential for small cars in India and there could be exponential growth in the next few years,” says Arvind Saxena, senior vice-president, HMIL. Ford India has earmarked Rs 2,000-crore to expand operations in India, which will include a second plant and an engine unit.