GM India to close Talegaon plant after deal fails to get government nod

Failure to close its deal with Chinese automaker Great Wall Motors which was announced early this year, will result in the closure of General Motors India’s Talegaon plant on Christmas eve.  The Talegaon plant was being used to export cars, primarily the Chevrolet Beat, to Mexico. The Talegaon site has 1,800 employees.

GM India had signed a binding term sheet with Great Wall Motors in January. The transaction, valued at INR2,000 crore (USD271 million) would have underpinned China’s largest SUV automaker’s plan to enter and invest in India. However, India’s regulators have not cleared the deal, supposedly a victim of the rising tension between India and China.

In April, India put in place stricter rules for investments from China and other neighbouring countries. After the killing of 20 Indian soldiers in Ladakh, Maharashtra, in June, the government said it was putting the GM-Great Wall and two other deals on hold.

GM sold its other manufacturing plant in Halol, Gujarat to another Chinese automaker, Shanghai Automotive Industry Corporation of China (SAIC), in 2017.

“Both companies continue to work with all relevant authorities to secure necessary government approvals to support the transaction, which will deliver future jobs at the site,” a GM India spokesperson was quoted as saying.

The company said it will support the impacted employees with separation packages and transition support. 

Great Wall Motors planned to invest a USD1 billion in India in a phased manner.

General Motors began doing business in India in 1928, assembling Chevrolet cars, trucks and buses, but ceased its assembly operations in 1954. GM continued with tie-ups with Hindustan Motors to build Bedford trucks, Vauxhall cars, Allison Transmissions and off-road equipment.

 In 1994, GMIPL was formed as a 50-50 joint venture between Hindustan Motors and General Motors to produce and sell Opel-branded vehicles. GM bought out the Hindustan Motors interest in 1999. GMIPL continued to produce Opel cars at the Halol facility until 2003, when it started production of Chevrolet vehicles at that location.

In 2000, GMIPL moved its headquarters to Gurgaon. In 2003, the company opened its technical center operations in Bangalore, which included research and development and vehicle engineering activities. The technical center operations were expanded to include purchasing and financial support services for General Motors operations located outside of India (2006), vehicle engine and transmission design and engineering (2007) and a vehicle design studio (2007).

GMIPL began construction of a second vehicle assembly plant in Talegaon in 2006, which began production of Chevrolet vehicles in September 2008.