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General Motors Says Its Expansion Plans in India On Track

U.S. automaker General Motors says its expansion plans are on track in India despite the troubles it faces in the United States. General Motors is among several global auto companies hoping to tap the potential of emerging markets like India.

Executives at General Motors in India were enthusiastic when they recently revealed a new version of the compact Spark Chevrolet, which runs on liquefied natural gas.

The company, which has filed for bankruptcy in the United States, says it is business as usual in India.

General Motors entered the Indian market in 2003, and sold nearly 66,000 cars last year - up 10 percent over the previous year. That is still way behind the market leader, Maruti Suzuki, which sells more than 10 times that number.

General Motors, however, is hoping to expand its footprint in India. Last year, the company commissioned a new plant with a capacity to produce 140,000 cars. It says it is confident of raising funds for its expansion, and has no plans to reduce its 40,000-strong staff in India.

Yogendra Pratap, editor of the Auto Bild magazine in India, says the company has good reason to be optimistic. Sales are expected to grow strongly in the coming years in a country where only seven out of every 1,000 people own a car, and where the economy is growing despite the global recession.

"The planning for these companies has always been for the long term, to get market share and be in a position to exploit the market once the market is up and running," said Pratap. "India is still in its infancy, so all these companies want to be positioned right once the Indian car market matures."

Like several other automakers, General Motors is pinning its hopes on the compact car segment, which accounts for four out of every five cars sold in India.

Besides the latest version of the Spark, it is introducing a new mini car later this year to compete with other popular small cars.

Pratap points out that these cars are very different from the ones General Motors sold in the United States.

"They have got a very strong product portfolio to do well in India. They are small cars, they are fuel efficient, they are not the huge suburban kind of trucks they sell in the U.S," said Pratap.

General Motors is not the only global automaker which has been making inroads into the Indian market in recent years. Companies such as BMW, Nissan, Honda, Toyota, Ford, Nissan and Audi have also made investments in the country, hoping to gain a foothold in the Indian car market.