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China’s SAIC to hit India

business Updated: Oct 07, 2010 01:32 IST
Sumant Banerji
Sumant Banerji
Hindustan Times
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China’s largest auto maker Shanghai Automotive Industry Corporation (SAIC) will mark the first entry of the dragon in the Indian car market when the firm will introduce three passenger cars including a small car, in collaboration with its joint venture partner General Motors in the next two years.

Many Chinese firms including Chery and Geely have in the past evinced interest in entering India, the second-fastest growing car market after China. But none of these plans have borne fruit so far. SAIC has two existing joint ventures in China — with Volkswagen and GM, and holds a 20 per cent marketshare in the world’s biggest automobille market.

“Our product pipeline is very robust and we plan to bring in atleast 6 new vehicles and 14 fuel varieties in the next two years,” said Karl Slym, president and managing director, General Motors India. “Out of these six, five will come from SAIC. While two will be mini trucks, there will be one small car and another two sedans. When the cars come in, SAIC will become the first Chinese company to venture into the Indian car market. “

In the domestic small car segment, which accounts for two-thirds of the Indian car market, GM currently has three cars — Spark, Beat and Aveo U-VA. The small car from SAIC is expected to be the one which will be priced and featured lower than the entry-level Spark, giving GM more traction in the market.

The scale of operations at which SAIC will operate in India will be vastly different from what it is used to in China. In 2009, the Chinese car maker produced 2.7 million vehicles of which 1.6 million were passenger cars and 1.12 million were commercial vehicles. In contrast in 2009-10, India’s entire passenger vehicle market was 2.0 million units strong with biggest domestic car maker Maruti Suzuki selling 870,783 units. The country’s commercial vehicle industry was even smaller at just 531,395 units, with market leader Tata Motors producing 322,699 units.

Preparations for SAIC’s entry are already underway. GM India is investing $250 million (R1,125 crore) in expanding its Halol car facility from 85,000 units to over 1 lakh units per annum while converting it into a commercial vehicle hub. Halol will produce SAIC’s two mini trucks, the first of which will be launched by the end of next year. With SAIC’s passenger cars in tow, GM’s ambitions are also soaring.

“I can guarantee sales of more than a lakh this year, which will go up to 2 lakh by 2012 and 3 lakh by 2013,” Slym said.
The size of GM India will be dwarfed by its joint venture (SAIC-GM) in China. GM-SAIC sold 7.3 lakh vehicles in China in 2009, making GM the second-largest foreign carmaker in the country, next only to SAIC’s other partner Volkswagen.