New Delhi: For General Motors India Pvt. Ltd chief Karl Slym, the expansion of the US auto giant’s 12-year alliance with its Chinese partner SAIC Motor Corp. Ltd to tap India’s burgeoning vehicle market is win-win for both sides.
The two firms announced in December a joint venture with an initial focus on selling mini-commercial vehicles and inexpensive, entry-level cars in India that will later embrace other Asian emerging markets.
“Our first business move will be in India but it won’t be the last—we will be spreading to other areas in Asia. We’ve made a commitment to expand in emerging markets,” Slym said. “There is a big benefit to SAIC to be able to spread its business outside of China. There is also a big benefit for us to partner with them.”
Optimistic: Karl Slym. Ramesh Pathania / Mint
In China, where General Motors entered in 1996, the Detroit-based company is the second largest auto maker, helped by its partnership with China’s biggest car maker, Shanghai Automotive Industry Corp., or SAIC.
GM, which is undergoing a drastic restructuring after being bailed out by the US government, is expected to post sales in China of 1.4 million vehicles this year.
But in India, Asia’s third-largest car market after China and Japan, where Japanese-owned Maruti Suzuki India Ltd holds a commanding leadership position, GM has been slower out of the starting blocks. The US auto firm, which started selling its Chevrolet marque in India only in 2003, is the fifth largest car maker in the country. It sold 67,500 vehicles last year, up 9.5% from the previous year.
Analysts see the 50:50 tie-up, in which SAIC is investing cash and GM is supplying its Indian plants and sales network, as giving GM more resources to grab a bigger share of the Indian market. It also gives SAIC its first foothold in India, furthering its aspirations of being an international car maker.
GM’s sales in India have been picking up with the firm clocking a 60% year-on-year increase in sales in November.
“GM has really reached a point now where we’re at a tipping point in India and the SAIC tie-up will help continue this growth,” Slym said.
Slym said the tie-up will allow the US company to sell in India for the first time its low-cost micro minivans and buses that GM makes now with its Chinese partners.
“Heavy trucks won’t be able to go into the cities because of restrictions, you will need smaller light commercial vehicles and I expect this market to increase hugely,” Slym said.
But the partnership will face big competition from local producers such as Mahindra and Mahindra Ltd and Tata Motors Ltd.