Unexpected Bills Faced by General Motors

Delays to General Motors’ sale of its Indian plant to Great Wall Motor due to tensions between India and China are likely to result in hefty unplanned costs for the U.S. automaker, people familiar with the matter said. Gaining Indian government approval for China-related deals is now expected to take quite some time and although the sale should still happen at some point, GM has not changed its plan to begin winding down the plant’s operations next month, they said.

Sources say, “By next year, it will either be a closed GM site or it will be an operating site with Great Wall.”

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GM had planned to use the expected sale proceeds of $250 million-$300 million to pay off liabilities incurred with its exit from manufacturing in India in what a second source said would have been a “no gain-no loss” situation.

Even though money will come through once the deal is done, it will now have to pay out of pocket for severance pay, some of which would never have occurred had the deal proceeded smoothly, as well as other costs – which could amount to a couple hundred million dollars, according to the second source.