Why Is General Motors Betting on India's Auto Parts Market?

General Motors Company GM is re-entering the world’s third-largest car market in a different way several years after leaving India. Rather than returning to sell vehicles, the Detroit-based company is focusing on the automotive parts business, which is typically less visible but often highly profitable.

The automaker recently relaunched its global aftermarket brand ACDelco in India through a licensing partnership with Assurance International Limited. Under this arrangement, Assurance will produce and distribute ACDelco-branded batteries and lubricants for the Indian market.

General Motors previously sold vehicles in India under its Chevrolet brand but withdrew from the market in 2017 after struggling to secure a meaningful market share despite operating there for many years. Following the exit, ACDelco also discontinued its Indian operations in 2020.

The company’s renewed presence focuses on India’s rapidly expanding vehicle repair and replacement ecosystem instead of competing in the crowded automotive sales market. The country’s vehicle parc, the total number of vehicles in operation, has surpassed 300 million, creating a large aftermarket sector valued at more than $12 billion annually and continuing to grow as vehicles age.

For global automakers that have scaled back local manufacturing, the aftermarket segment offers stable margins without the substantial capital investment required for vehicle production.

Initially, ACDelco’s lineup in India will include automotive batteries and high-performance lubricants for both passenger and commercial vehicles. These products will be manufactured locally at facilities operated by Assurance in Hisar.

Assurance has already invested about Rs 180 crore in a lubricant blending and packaging facility with a daily capacity of 100,000 litres. In addition, a battery manufacturing plant, planned with an investment of roughly Rs 300 crore over three years, is expected to begin production by April and eventually reach a capacity of around 25,000 units per day. GM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

GM’s Price Performance, Valuation and Estimates

General Motors has outperformed the Zacks Automotive-Domestic industry and its peers, Ford Motor Company F and Tesla TSLA. GM shares have gained 28.1% compared with the industry’s growth of 9.9%. F has gained 4.8%, whereas Tesla has risen 0.8% during the same period.

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From a valuation perspective, GM appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.36, lower than the industry’s 3.3. F and Tesla are trading at forward sales multiples of 0.28 and 14.25, respectively.

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The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS has moved up 3 cents and 8 cents, respectively, in the past seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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