NEW DELHI: China’s biggest automobile manufacturer SAIC Motor Corp is looking to make vehicles in India as it plans to buy the Gujarat factory of embattled American carmaker General Motors.
SAIC, which partners GM in China and holds a singledigit percentage share in the US company’s India operations, is conducting a due-diligence of the Halol factory that GM will vacate by July as it focusses on operations through its plant at Talegaon in Maharashtra. “The company is in advanced stages of negotiations with GM on the matter,” a top industry official told TOI.
SAIC -which also partners German auto giant Volkswagen in China -will be the first major automotive company from dragon land to start manufacturing in India, if the deal with GM materializes. The company is expected to begin its India operations by contract-manufacturing GM India’s models that are already being made at Halol, sources said. GM makes `Cruze’ sedan and `Tavera’ and `Enjoy’ MPVs at the factory .
When contacted, a spokesperson for GM India said, “We are examining a number of options in relation to the Halol factory . We have nothing further to announce at this time.”
SAIC had bailed out GM’s India operations in 2010 when the company was battling bankruptcy in the US. GM’s Indian business has been a laggard for many years. “After getting control of the Halol plant, SAIC may also sell its holding in GM India,” a source said.
Halol, GM’s first factory in India, has a capacity of 1.1 kers and a new buyer may agree to retain many of them.
The two companies have also kept top officials of the Gujarat government in the loop as they look to strike a deal. GM is trying to ensure that fiscal incentives promised to it by the Gujarat government are passed on to the new buyer, which will boost chances of a potential deal.
Despite a presence of over two decades in India, GM has not been able to record profit so far and is estimated to be running accumulated losses of around Rs 4,000 crore. The company , which has issued massive car recalls in India, has a current market share of just 1.2% in the passenger vehicle segment. It sold 24,479 units in the first nine months of fiscal 2015-16, a fall of 38%.In comparison, the overall market share at just 1.2% in the passenger vehicle segment.
GM global CEO May Bar ra, who visited India over the past few months, had announced fresh investments of Rs 6,400 crore when she met Prime Minister Narendra Modi in July last year. “GM cannot remain a global leader without making a serious investment towards expanding our presence in growth markets like India,” Barra had said, announcing plans for 10 new vehicles under the `Chevrolet’ badge over the coming years.
The company recently shuffled its India management team, moving out industry veteran Arvind Saxena and appointing Kaher Kazem as president and MD of the local operations. Dealer viability, however, remains a concern for the company in view of poor sales.