SAIC to Enter Indian Auto Market through GM Partnership

One of the leading auto companies from the biggest auto company in the world, the Shanghai Auto Industry Corp. or SAIC will soon enter the Indian auto market through GM India. The company will begin by selling LCVs in India.

GM is currently planning to aggressively expand their growth, and will be making an investment of around INR 2,000 crores for hiking their production capacity from 2,25,000 units to 4,00,000 units. GM plans to treble their sales figures in India and be a formidable contender in this market. The company’s managing director, Karl Slym, was quoted as saying that by 2012-13, they will capture around 10% of the market share from the current 4%.

When GM went bankrupt in 2009, they brought in their Chinese partner, the SAIC into their Indian subsidiary GM India, as a 50% JV partner. The SAIC managed to sell around 3mn cars in China last year. They currently have 3 of the 6 board seats in GM India, creating a joint MD position for installing their representative at the top position, apart from other senior officers.

The entry of SAIC could change things around for GM in India. The company’s low cost engineered models are quite successful in China. In the first half of the year, the company’s Wuling minivan, to be introduced in India as well, managed to sell around 648,000 models in China. The company hopes that they will be able to copy this success in the Indian auto market as well.

The joint partnership company of GM-SAIC could be China Inc.’s way of exploring the new emerging markets. Both the companies have a 50:50 Hong Kong based joint venture, the GM SAIC Investment, which will help with their expansion. The other Chinese companies like Chery and Geely, will be closely watching their moves from sidelines. The $60bn bilateral trade between India and China is dominated largely by imports from China.

GM India plans to introduce two LCVS from SAIC in early 2012. One of these models will compete with the successful Eeco from Maruti that is priced in the range of INR 2.8 to 3.8 lakhs, and the Tata Venture that is priced in the range of INR 4 to 5 lakhs. They also plan to introduce a 1 tonne pickup truck around this time for competing with the Mahindra Maxximo and Tata Ace.

They are also focusing on niche markets, for example, the Maruti Eeco, introduced back in 2008, grew by 30% in spite of slow growth in the car market. This category is projected to reach around 2,75,000 units by 2012-13. Though their products will be categorized as LCVs, they will have multi-purpose and can be used as school vans, goods carriers, and taxis for small entrepreneurs as well as a modest car for a big family, making it quite versatile.

With this new product line, GM hopes to have a great run in this category. For this, the company’s Halol facility is also being converted into a global centre for manufacturing LCVs.

With a 14mn strong market, China is the biggest car market in the world, while the SAIC is their largest player. The government listed and owned company, is a stated owned firm, similar to the public sector undertakings in India. Selling 3.6mn cars in 2010, the company has managed to sell more cars than all of the cars put together in India, which saw 2.6mn cars sold. The SAIC is also the 8 biggest auto conglomerate in the world. Two of the company’s biggest JV partners are Volkswagen and GM, both of which managed to sell above 1mn cars last year.

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