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NEW DELHI / Reuters
China’s top carmaker SAIC Motor Corp and Great Wall Motor, its biggest maker of SUVs, are spearheading the country’s first major push into India, one of the world’s fastest growing auto markets, as growth at home stagnates.
The entry is late and risky – global carmakers like Volkswagen AG, Ford Motor and General Motors have struggled to push sales in the cost conscious Indian market despite being here for more than a decade. Chinese cars also suffer from perceptions of poor quality in India.
While they plan to woo Indian buyers with their no-frills cars and cut-price SUVs, Chinese manufacturers will compete head on with established carmakers like Suzuki Motor and Hyundai Motor that dominate many markets in Southeast Asia.
Even so, India offers one of the last frontiers of growth – by 2020 the country is likely to become the world’s third-largest car market, from fifth place, with annual sales nearly doubling to 5 million vehicles from 2.7 million in 2015.
SAIC and Great Wall are in separate talks with the state government of Maharashtra in westernIndia to set up a factory in the auto hub of Pune city, the state industries minister told Reuters.
A source close to SAIC said the company is considering Pune city among other locations. The automaker plans to set up a factory in India within the next three years and is in the early stages of researching such a move, the person said.
“The market potential of India is huge,” said the source.
For SAIC, the maker of marquee MG and Roewe cars, India is next on the agenda after entering Indonesia and would happen before they try to enter Russia, other European nations or the United States.
SAIC is also in discussion to buy a plant currently operated by GM in western Gujarat state, according to people familiar with the matter. The Detroit automaker plans to stop production at the Halol plant in Gujarat by end-June as it consolidates operations at one location.
“We are examining a number of options in relation to the Halol factory … including the sale of the site,” GM said in a statement. The company declined to elaborate on how it plans to sell the factory and said there was nothing further to announce about Halol at this point.
In February, 12 executives from Great Wall attended the India Auto Expo car show to survey the market and understand government policy on diesel engines and emissions, an industry source in India said.