General Motors to Expand Chevrolet in India, Shares Rise
Share price of General Motors Co. (GM) increased 1% to $33.61 on Sep 11 after the automaker announced its expectations of enhanced opportunities for its Chevrolet brand in India. The CEO of General Motors and a few other officials recently paid a formal three-day investigational visit to India in order to weigh opportunities, restructure operations and evaluate its product portfolio.
According to IHS Automotive data, India will become the world's third-largest passenger car market by 2018, a significant hike from the sixth position it presently holds. Meanwhile, General Motors expects India – a large market with a moderate small vehicle population and rapidly expanding young middle class – to be positioned as the world’s third largest market by 2020. Thus, the automaker is working hard to understand the Indian market and provide customers with high-quality vehicles that provide safety along with outstanding designs.
Sales in India are on the rise and are expected to increase 5–10% in 2014. This has encouraged General Motors to plan a launch of 40 new vehicles in the nation along with the international markets of China, North America and Europe. However, General Motors faces tough competition from Korea's Hyundai Motor Co, Japan's Honda Motor Co., Ltd. (HMC) and Maruti Suzuki in India. These three companies together generate about two-thirds of vehicle sales in the country.
Lately, General Motors has been focusing on emerging markets, particularly Brazil, China and India, to recoup its global sales by increasing capacity investment to meet the growing demand. The car maker has invested about $1 billion in the Talegaon and Halol facilities in India. These facilities have a capacity to manufacture about 280,000 vehicles per year.
During the visit to India, the company representatives participated in different activities. The initiation of Chevrolet production for export to Chile was celebrated in the Talegaon facility. The officials announced intentions to localize supply base and utilize products made in India. Further, they visited Chevrolet dealerships to gain a better understanding of market conditions, customer preferences and performance.
General Motors currently carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks worth considering include Tesla Motors, Inc. (TSLA) and Fox Factory Holding Corp (FOXF). While Tesla sports a Zacks Rank #1 (Strong Buy), Fox Factory carries a Zacks Rank #2 (Buy).
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