US major General Motors, that lost over $51 billion over the last three years due to reversal in demand at home, expects India to become a significant profit centre in the coming years and emerge as a key base for developing low-cost car technologies. Sales growth rate in India and other emerging markets were healthy and GM was making good profits, said Fritz Henderson, company's global president and chief operating officer. Henderson was here to inaugurate the company's second manufacturing plant.
"I can concieve this market to emerge as the third-largest in the world quite easily due to its population and the opportunities. The fundamentals that drive primary demand point to that. Opportunities will continue to grow," Henderson told TOI after launching a new variant of the company's multi-utility vehicle Tavera.
According to him, India is a very important market for GM and would be a "large opportunity" in the next 5-10 years. "We may be small here in comparison to China, Brazil and Russia. But our view is that we can build our business step-by-step," he said, though conceding that the market also had a lot of competition.
Henderson said the US market, that has been behind GM's poor run for a long time now, was expected to continue to be depressed even this year. GM expects its vehicle sales in US to be a little over 14 million units this year, lower than the 16 million in 2007, he said, adding that emerging markets like India would be the main volume and profit drivers.
"We are making substantial amounts of money in Asia-Pacific region, Latin America, which mostly house emerging markets. In fact, in the first half of this year, business in these regions has been solidly profitable."
In line with the high expectations from India, he said the company had already committed close to $1 billion investment. "This year and the next year, we got a lot of capital funding in India... But India will be a source of significant profit contribution to the company in the future," he said.
Henderson also praised R&D capability in India in developing low-cost technologies and said the company had an engineering centre at Bangalore. "Our Bangalore centre has 1600 engineers and scientists. They are involved in GM's global product development process and also increasingly in Indian product activities," he said.
The Bangalore team has a good focus on frugal engineering. "In fact, to get to the really low-cost car, India will be a natural place to look at it," he said.