In a move to completely pull out of India after a disastrous performance, American automobile major General Motors (GM) has entered into an agreement with China’s Great Wall Motors (GWM) to sell its manufacturing facility at Talegaon near Pune for an unspecified amount.

The proposed deal is subject to requisite government and regulatory approvals.

Under a binding term sheet signed on Thursday, the GM India legal entity, which includes the Talegaon facility, will be transferred to GWM.

In 2017, GM stopped production and sale of its cars in India and sold its first factory at Halol in Gujarat to Chinese auto major SAIC, which is now manufacturing its Morris Garages (MG) range of vehicles in India, namely MG Hector.

In September 2019, GM India signed an agreement with Tata Consultancy Services (TCS) to transfer its Bengaluru based technology centre along with 1300 employees. 

And now the Talegaon plant its sole asset and the Indian legal entity is being sold to Great Wall Motors which has ambitious plans to enter the Indian market with a big bang.

Liu Xiangshang, V-P, global strategy, Great Wall Motors, said the transaction would underpin the company’s plan to enter and invest in India.

“The Indian market has great potential, rapid economic growth and a good investment environment. Entering the Indian market is an important step for Great Wall Motors’ global strategy,” said Mr. Xiangshang.

“It is also an important measure to respond positively to the Indian government’s national strategy of vigorously advocatingMake In India, Digital India and a ‘strong focus on clean energy in India’ and building a new India vision,” he said.

“Great Wall Motors’ investment will create more jobs, including direct and indirect employment, further enhancing the skill level in the auto industry; promote the development of the local supply chain, R&D and related industries; and contribute more profits and taxes to the government of India and the government of Maharashtra,” Mr. Xiangshang added.

He said Great Wall Motors will officially debut its Haval brand and GWM EV at the Delhi International Auto Show, and launch its Indian market plan.

The outright purchase of GM’s plant will enable the Chinese company to have an immediate head start and it can roll out its products without waiting for another two years to build a new plant. Great Wall Motor has booked 3,500 sq.meters space to showcase its vehicles in the auto show. 

Julian Blissett, senior V-P, International Operations, GM said the Talegaon manufacturing facility had delivered excellent vehicles for domestic and export markets. 

“Since focusing the Talegaon plant on manufacturing for export markets in 2017, GM has been exploring strategic options for the better utilization of the site,” Mr Blissett said.

“Our decision to cease production at Talegaon is based on GM’s global strategy and optimisation of our manufacturing footprint around the world,” Julian Blissett, Senior Vice President, International Operations, GM, said in a statement.

“On behalf of GM, I also want to express our gratitude to the government of Maharashtra and the government of India for their supportive partnership ever since we began to make investments and build cars in India. We will work closely with the state and national governments to secure the required approvals so that GWM can elevate production at the plant even further and maintain Talegaon’s status as a vibrant vehicle manufacturing region,” he added.

GM will provide a separation package and transition support for impacted employees, as well as an orderly transition for partners. The transaction is expected to close in the second half of 2020.

Since 2017, GM has been manufacturing Chevrolet Beat which is exported to markets in Latin America and this will soon stop. 

GM said Chevrolet will continue to honour all warranties and provide after-sales support, including ongoing service and parts requirements for existing customers in India.