GM to start exporting cars from India in 2nd half of year

General Motors will start exporting vehicles from India in the second half of the year, aiming to ramp up local capacity utilization rates amid a slowdown in the domestic auto market.

The first export nameplate will be the left-hand-drive version of the Chevrolet Beat minicar, which is sold as the Spark in the United States. It will go on sale in Chile in the first quarter of 2015, GM India said in a statement on Tuesday.

GM’s Talegaon plant will produce the cars. The Beat was introduced to India in 2010 and is GM’s top-selling nameplate there.

The move to export reflects increased confidence in the quality of GM’s local supply base, GM India President Arvind Saxena said in the statement. But it also aims to offset sliding sales and pump up output at underused factories.

“The exports will create more employment opportunities within GM India and the supplier community while helping improve capacity utilization at the Talegaon plant,” Saxena said.

GM, like other international automakers, rushed into the world’s No. 6 auto market when the market was rapidly expanding. But carmakers have since been slammed by slowing growth in India.

In the fiscal year ended March 31, passenger vehicle sales in India fell 6 percent from the previous year to just more than 2.5 million vehicles, according to the Society of Indian Automobile Manufacturers. April sales slid another 10 percent year on year.

The result has been a capacity glut.

Overall, the industry used just 55 percent of its production capacity in India last year, according to India’s ETAuto.com, an online publication of The Economic Times.

GM’s capacity utilization rate is among the lowest in India.

The automaker has two factories in India, which have combined capacity of 282,000 vehicles. It used only 28 percent of that total, ETAuto.com reported, citing data from the Society of Indian Automobile Manufacturers.

Volkswagen’s capacity utilization rate was 43 percent, Toyota’s was 50 percent and Honda’s was 56 percent, while Ford came in at 67 percent and Hyundai topped the list with 91 percent. Domestic heavyweights Mahindra and Tata also suffered overcapacity. Mahindra’s utilization rate was 38 percent, while Tata’s was 33 percent.

GM’s sales tumbled 35 percent in April to 5,302 vehicles, from 8,196 units the year before, outpacing the market’s decline.

“Buoyancy in the market is completely missing,” GM India Vice President P. Balendran said. “Going by the market scenario, we expect the challenging times to continue as the general economic conditions continue to remain depressed.”

Looking for an outlet overseas is one solution.

India has rapidly developed as an auto export hub. Shipments more than doubled to 554,700 passenger vehicles in the fiscal year ended March 31, 2013, from 218,401 five years earlier.