Saturday, June 13, 2009

GM Bankruptcy: What does it Mean for South Asia?

Today, I spent many hours watching CNN and BBC. Well, yesterday, there were many reports indicating that General Motors would file for bankruptcy today. The accident of a French plane perhaps took away much of the attention from the GM event in these two channels. This bankruptcy is certainly a very big news for USA and even some European countries. Naturally, some plants will be shut down and many jobs will be lost. However, for South Asia, this is a different story.

First of all, General Motors is not a very big player in the Indian auto market. The good thing is that GM India: Not Included In Parent’s Chapter 11 Filing. So, it seems to me that GM India will not be in a bad position. However, there some concerns may arise among the consumers about buying General Motors car in India. They may be worried whether after buying cars they can have good customer service as GM has become bankrupt in USA.

Economic Times reported:

To address concerns related to spare parts, investments, new launches and service networks in the country, the company is launching a new marketing campaign called “there for you, there for India”. “We are not cutting back on investments, or stopping production of any model,” said Ankush Arora, GM India V-P, marketing and sales. In fact the US auto maker is going ahead with its new launches in the country. In a few days, it will launch the LPG variant of the Spark followed by the Chevrolet Cruze in September and the mini car early next year.

The bankruptcy may also cause some concern in the Information Technology industry in India. Tata Consultancy Services (TCS), Wipro and Satyam have multi million dollar outsourcing deals with GM. So, these companies are likely to suffer. As for the other countries in the region, I don’t think that this fallout of America’s largest automaker will make any significant impact.

(This entry was first published a few days ago but then it got deleted because of technical problems. So, I have uploaded it again now)

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