General Motors, US's largest auto-maker, expects sales in India to drop this year as an economic slowdown coupled with high interest rate has hurt demand. The Detroit-based auto-maker's sales have grown only 7 per cent till October, compared with more than 65 per cent a year earlier. Still, Karl Slym, president and managing director, General Motors India, is bullish on ending the financial year with 20 per cent growth. He spoke to Swaraj Baggonkar about the company's plans.

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Excerpts:

How has the high interest rates affected you?

We don't see problems in the Spark class; but certainly many companies are facing problems in the multi-utility vehicle area, especially if used for commercial purposes. We probably could have sold another 20-30 per cent if there was an easy availability of vehicle finance. So people continue to be interested in buying cars, but the sheer lack of finance is a concern.

Do you plan to reduce prices further as you now have higher localisation?

The fact that we have improved localisation will enable us to price our models competitively. We can build 300,000 cars instead of 85,000. We will achieve 70 per cent localisation by the end of this year. There has been a major technology change from our Halol (Gujarat) plant to the Talegaon (Maharashtra) plant. I would say Talegaon has given us the ability to price vehicles at Rs 2,66,000 (for the Spark) and, in the future, it will allow us to build new vehicles with competitive prices.

Which models are you aiming to produce at Talegaon?

We are not bringing anything below the Spark. Actually, the next car we are launching will be a mini-car priced at a premium than the Spark. So, in the small car segment, we will have three cars -- the Spark, the new mini car and the Aveo U-VA. The mini car will be a global brand as far as GM's global platform is concerned.

Do you expect the Nano to impact the sales of Spark?

The buyer has to decide what his money can get him. I don't feel threatened that a customer of Chevrolet is going to buy the Nano instead.

What will be the impact of GM cutting down R&D spend?

Despite the international turmoil, there will be no change in plans as far as India is concerned. We will go ahead with the original plans. The total investment we are putting in will be over a billion dollars in India.

What's your outlook for remaining part of the year?

We are predicting a 20 per cent growth this year. We had reasonably strong sales in October. But obviously, we would have liked more than that; there has been an effect (of the slowdown on sales). One has to be cautious during such times but you cannot lock the door and stay inside.

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