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News18 » Auto
2-min read

General Motors' Dealers to Seek PMO Intervention Over Compensation Issue by US Automaker

The dealers claim that they are likely to suffer a total loss of around Rs 1,000 crore due to GM's decision to pull out of the Indian market.


Updated:July 3, 2017, 5:13 PM IST
General Motors' Dealers to Seek PMO Intervention Over Compensation Issue by US Automaker
The GM logo. (Photo: Reuters)

Dealers of General Motors will seek the intervention of the Prime Minister's Office over alleged "cheating and misleading" by the US automaker which will stop selling vehicles in India by the year-end. A delegation of dealers led by industry body Federation of Automobile Dealers Associations (FADA) will meet Minister of State in PMO Jitendra Singh to discuss the matter. The dealers claim that they are likely to suffer a total loss of around Rs 1,000 crore but have been offered measly compensation of just about Rs 100 crore. Moreover, they said, the decision by GM to pull out of the Indian market will result in job loss of around 15,000 people. "A delegation of GM India dealers led by FADA will highlight how they have been cheated and misled to believe that GM was making huge investments in India in the meeting with the minister on Monday," FADA President John Paul Kuttukaran told PTI. The company had said that the investments would result in launching a number of new models in India, he said. "Huge long-term investments were made by dealers both in infrastructure and manpower and the sudden decision to withdraw from the domestic market has resulted in huge losses to the dealers," Kuttukaran said.

General Motors India, however, maintains that it was providing its dealer partners with a fair and transparent transition assistance package based on a methodology that is consistent across all dealers. A majority of General Motors India's 96 dealers, which operate around 140 showrooms across India, are unhappy with the company's offer of just around 10 percent of total investments they have made as compensation. The dealers are asking the government to intervene in the matter. Besides meeting Singh on Monday, the dealers plan to approach other ministries like Labour, MORTH, Heavy Industries over the matter. The dealers have already decided to explore possibilities of filing class action suits against the American automaker in the US over inadequate compensation being offered to them.

As per the conditions set by General Motors, a dealer who does not accept its offer by July 15 would only get 50 percent of the compensation amount being offered. In case a dealer does not accept the offer by September 15, he would not get any compensation at all. In 2015, the company had announced an investment of USD 1 billion in India to enhance manufacturing operations and roll out 10 locally-produced models over the next five years. In January this year, the American firm put on hold its investments on new models for India as it undertook a full review of its future product portfolio in the country. On May 18, GM suddenly announced that it would stop selling vehicles in India as there was no turnaround in its fortunes here even after struggling for over two decades to make a mark. The company will now focus on exporting vehicles from its manufacturing plant at Talegaon in Maharashtra after it had stopped production at its first plant at Halol, Gujarat, last month.

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| Edited by: Ayushmann Chawla
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