After waiting more than two years to obtain government approvals for selling its plant to Chinese carmaker Great Wall Motor, General Motors has started plan B by exploring other potential buyers, multiple people aware of the development said.
Great Wall Motor, which was exploring a plan B of importing completely built units (CBUs), has dropped that plan, too, they said, indicating that the proposed $1-billion investment by China’s largest SUV maker in India may be withdrawn.
The approvals for the GM-GWM deal are stuck because of strict screening of foreign direct investment (FDI) proposals, particularly from Chinese firms, by the central government, the sources said. The term sheet agreement for the sale of the Talegaon plant between General Motors India and Great Wall Motor will expire on June 30 and is unlikely to be extended, they said. “The term sheet, which has previously been extended, expires on June 30, 2022, and we have no update to share at this time,” General Motors India told ET in an email response.
“Employees have been legally separated.” A GWM spokesperson in an email response said, “We continue to seek relevant FDI approvals and now are waiting for the result.” The spokesperson did not offer specific comment on the queries of exit. Changan Automobile, another Chinese carmaker exploring entry into India, had shut its office in 2021.
ET has learnt that GM has started receiving interest from some electric vehicle (EV) makers, including some two-wheeler makers, to acquire the facility. While GM claims the workers have been legally settled, the workers continue to fight a legal battle in Pune Industrial Court and Bombay High Court.
General Motors India laid off 1,086 workers who had not accepted a voluntary separation package, triggering a legal battle with its employees’ union that approached the industrial court in Pune last year. In January 2022, the court directed GM India to pay 50% of wages to little over 1,000 employees till it disposes of the matter.
The same has been challenged by General Motors India in Bombay High Court. About a third of its employees had accepted VSS by July 4, 2021. GM had stopped production at the factory in December 2020 and agreed to sell it to Great Wall, though the deal had been stuck in part due to the labour issue at the plant.
Over the last two years, the term sheet between GM and Great Wall Motor was extended twice and in the interim, the Chinese maker of Haval SUVs did explore multiple routes, including CKD (completely knocked down) and CBU imports and rolling electric vehicles to build the brand identity.
Due to sustained challenges on the geopolitical front, the proposal has barely moved and due to further scrutiny of other Chinese investments in India, it appears that the project may not be moved, said one of the four people that spoke to ET.
Waiting for approvals, Great Wall Motors’ team in the country has shrunk from 25-30 executives at its peak to 10 now. Kaushik Ganguly and Arushi Kumar, were two major exits seen by GWM recently. While Ganguly has reportedly joined as a COO in a new venture, Arushi has been roped in by Mahindra as their Head for EV brand. Exits from sales and marketing, business planning and other important roles have not been refilled.
A couple of Chinese executives who are steering the operation at present are speculated to return to the home base, people in the know said.
Last year, the executives were given a pay hike and incentives, but this year, there is no increment extended so far and the frequency of meetings too have come down, giving strong indications that Great Wall Motors’ India endeavour may be hitting its last lap.
