After being hit with the country's biggest "corporate fraud" in the automotive sector, General Motors is now trying to turn a new leaf. The India subsidiary of the Detroit-based carmaker is working overtime for an image makeover and is also looking to fix emission related issues on engines in 114,000 units of the multi-purpose vehicle Tavera that was manufactured between 2005 and 2013 recalled by the company last year. The unenviable task to fix the mess has now squarely fallen on the shoulders of an industry veteran and a former Maruti Suzuki executive Arvind Saxena, the first local Indian at the helm of affairs at GM since 2007.
"My mandate is very clear. I have to improve the operations for GM in India which would mean internal and network efficiency," Saxena said in his first formal interview since taking charge as president and CEO of GM India last month.
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In October last year a government appointed panel headed by Nitin Gokarn, CEO of the NATRIP accused GM of committing a "corporate fraud" and alleged that the company's top management from 2005-2012 were complicit in manipulating the conformity of production testing norms for its MPV Tavera. This was a huge setback for the company. GM is now currently awaiting Special Investigating Reports from the governments of Gujarat and Maharashtra.
Saxena insists that "corrective action" has been taken to ensure that "re-occurrence of such issues is not repeated." He however acknowledges the need for creating the right perception in the market for brand GM. "We need to improve the perception in the market and be seen as a very customer friendly organization," Saxena says. He further adds, "GM has been very transparent in bringing this up and frankly it is behind us and we should look forward how do we get the confidence and that's why I say we should be seen to be more customer friendly organization."
Last year to fix accountability, GM fired over 20 executives from the company including their CFO Anil Mehrotra and Vice-President for global engine engineering Sam Winegarden. It has also overhauled its manufacturing process following an audit carried out by Ernst & Young. According to P Balendran, Vice-President (Corporate Affairs) at GM, the company has replaced engines in 20,000 out of the 114,000 Taveras it recalled. He claims Tavera sales have not been impacted due to the recall and cites the monthly sales data for the MPV as a case in point. Last month GM sold over 1,000 units of Tavera.
Once the storm settles down, Saxena would also have to work towards enhancing the company's product portfolio from the current 8 cars it offers and increase market share, which at the end of last fiscal stood at a little over 3% even though GM has been in India for 16 years. However, it won't be an easy task. Saxena says the slowdown in the car market is currently so acute that he does not see any major turnaround till the end of this calendar year.
One strategy that is quietly being put in place is to start exports out of its two manufacturing plants at Halol and Talegaon. According to GM insiders, the export plan is yet to be finalized fully as the company is mulling the products to be shipped overseas. This, they say, will also turn GM profitable in India. Saxena refused to divulge much when asked but added, "Domestic market is priority for us and exports could be a possibility in the future but I can't say much about that right now."
At a time when GM is facing a lot of heat in its home market in the US for faulty ignition switches including a US congressional probe, its India subsidiary too is awaiting an SIT report from the governments of Gujarat and Maharashtra that could see the US automaker shell out a tidy sum as compensation for manipulating COP testing norms in Tavera.
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