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This 'Spark' fails to ignite GM's fortunes
S Kalyana Ramanathan in Chennai
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December 07, 2007

Chevrolet Spark, the small car with the iconic bow tie marquee from General Motors, has turned out to be a dampener for the ailing American carmaker in India.

In the seven months between April and October this year, the Chevy Spark has managed to sell less than 12,000 units, or an average of 1,700 units a month, while its peers Alto and WagonR (Maruti [Get Quote] Suzuki) , Indica (Tata Motors [Get Quote]) and Santro (Hyundai) have had average monthly sales of 10,000-18,000 units.

Chevy Spark's lacklustre sales has been a big disappointment. This Daewoo [Get Quote] Matiz makeover started its second innings in India in April this year.

In 2001, GM acquired South Korea's Daewoo Motor, gaining access to the small car platform in the process. Before that, Matiz had made a successful foray into the Indian market, and at one point it was the best-selling car ahead of even Maruti's offerings.

In slow gear:

Despite the acquisition, it took a full five years for the Matiz to return to India as the Chevy Spark.

During this period, GM was toying with the idea of buying Daewoo's assets in Surajpur, Uttar Pradesh, as well. However, after prolonged negotiations with the consortium of Daewoo's lenders the deal fell through, resulting in a severe delay in GM's small car plans for India.

Now, the Chevy Spark's failure to push General Motors India into the league of large volume players that comprises Maruti Suzuki, Hyundai and Tata Motors cannot be more ill-timed, given its parent's dismal performance globally.

For the third quarter ended September, GM (worldwide) reported a staggering loss of $39 billion. The company had in 2006, reported a net loss of $10.5 billion.

Ankush Arora, head of marketing and sales, GM India, explained Spark's poor showing in India to inherent capacity constraints and that the rollout was phased with the northern and western markets taking priority over the south. The Spark is now available across the country.  The Chevy Spark today carries a price tag of Rs 3.10 lakh-Rs 4.25 lakh (ex-showroom Delhi).

Up and down:

Since the April launch, monthly sales of Spark have oscillated between 1,200 and 2,300 units. For 10 days in October, as a festival season offer, GM offered a massive discount of Rs 53,000 on the six-month old model, which got bookings for 12,000 units. These will be delivered by February 2008.

This improved order book will, however, do little to improve monthly sales, on account of the capacity constraints at the Halol plant in Gujarat.

GM India roles out six models under the Chevrolet brand from the Halol plant which has an annual capacity of 85,000 vehicles.

A new plant is under construction at Talegaon, near Pune, which will have an initial capacity of 1,45,000 units annually. This new plant is expected to commence production next year. The company is also planning a new diesel engine and transmission unit in Maharashtra.

Show it off

Mohit Arora, senior director at JD Power Asia-Pacific, agreed that capacity limitation was the main reason for lower Spark sales, and said that it was not the best strategy a company in GM India's position should have adopted. "You need to have the product available in the showroom," he said.

Arora said the Spark has been booked up to February 2008 and starting from next month the company plans to improve monthly production of this model at the Halol plant to 3,000 units.

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