General Motors, once the world’s largest car maker, has decided to stop selling vehicles in India by the end of 2017, since it considers its India operation to be not profitable. The company re-entered a liberalizing India in 1994, after abandoning the country in 1954. Like its American compatriot Ford Motor Company, GM’s market share in India has always been in the single digits, but recently Ford has reported rising monthly sales of 36% in India.
What U.S. CEOs Can Learn from GM’s India Failure
General Motors, once the world’s largest carmaker, has decided to stop selling vehicles in India by the end of 2017, since they consider their India operation to be not profitable. A few years ago, Mary Kay Cosmetics also exited India, blaming local issues for its problems. While India now claims to attract more foreign direct investment than China, American companies have not been as visible as European and East Asian players. Is there something wrong with the India opportunity? Or are some American companies being unnecessarily restrained about the world’s fastest growing major economy? The success of dozens of large American players in India — Boeing, Cisco, Coca Cola, Cummins, Dell, General Electric, Google, Hewlett-Packard, McDonalds and PepsiCo — suggest that it is the latter and that there is a “right” approach to India. Based on the experiences of these companies, and of what we know about GM’s sales demise in India, there is a specific kind of leadership and strategy that works in India. American CEOs need to take heed, or else cede what will soon be the most populous country on the planet to Asian and European competitors.