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Business News/ Companies / News/  Chinese auto firms eye GM’s last plant in India

Chinese auto firms eye GM’s last plant in India

SAIC, Great Wall Motors in talks with GM to buy its Talegaon factory in Maharashtra
  • SAIC and Great Wall are looking at new markets for expansion, given that China has reached saturation point
  • General Motors Corp. manufacturing plant in Talegaon (Photo: Bloomberg)Premium
    General Motors Corp. manufacturing plant in Talegaon (Photo: Bloomberg)

    New Delhi: SAIC Motor Corp. Ltd and Great Wall Motors Co. Ltd, two of China’s biggest automakers, are in talks with General Motors Co. to acquire the Detroit carmaker’s last remaining factory in India, two people aware of the development said.

    Located at Talegaon in Maharashtra, the plant can produce 165,000 vehicles a year and 160,000 power trains. GM had in 2017 sold its first factory in India at Halol in Gujarat to SAIC. MG Motor India, a unit of SAIC, has tasted runaway success with its debut Hector sport utility vehicle (SUV) since it went on sale in June.

    This has likely prompted SAIC to eye GM’s second factory as MG has outlined an ambitious product introduction plan for the Indian market. MG plans to introduce its second product in India, an electric SUV, next month.

    Great Wall, China’s biggest SUV maker, is actively scouting for land or existing factories in India to start operations.

    SAIC and Great Wall are looking at new markets for expansion, including India, given that China has reached saturation point, one of the two people cited above said on condition of anonymity.

    “MG Motor has a capacity of just 80,000 units in the Gujarat plant which is not adequate if they get three decent products in India," the person said. Great Wall has also initiated negotiations with the Maharashtra government for a potential purchase of the plant in Talegaon, the person added. “The company, though, is also looking at other options across the country to set up its first manufacturing plant in India."

    GM stopped selling vehicles in India in early 2017, using the Talegaon plant to export its Chevrolet Beat hatchback primarily to Latin America. It could not completely shut its India operations as it failed to find a buyer for the second plant.

    (Graphic: Sarvesh Kumar Sharma/Mint)
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    (Graphic: Sarvesh Kumar Sharma/Mint)

    Both companies, especially Great Wall, are looking to acquire factories instead of setting up a greenfield facility, which generally takes a couple of years, the second person said, also requesting anonymity. The Talegaon plant, therefore, offers a good option.

    “Also, the plant is a recent one and is situated close to the port. Great Wall is actively looking for options in the Indian market and GM has been looking for a buyer to sell this plant for quite some time. After the deal with JSW fell through, this provides GM a fresh opportunity to shut shop in India," the person said. The discussions between Great Wall and GM have reached an advanced stage, while they are at a preliminary level with SAIC, the person added.

    Sajjan Jindal-led JSW Energy was in advanced talks with GM to buy the Talegaon plant, but the deal faltered after JSW decided to suspend plans to develop electric vehicles.

    Responding to Mint’s queries, a spokesperson for GM India said, “As we have said previously, we are exploring strategic options for the site."

    Meanwhile, to reduce its already scant presence in the Indian market, GM, on 16 September, announced an agreement with Tata Consultancy Services Ltd, wherein the country’s largest software exporter will acquire certain assets of GM’s technical centre in Bengaluru, besides absorbing 1,300 employees.

    Puneet Gupta, associate director of vehicle forecasting at IHS Markit, said weak automobile demand in India and idle capacities offer a great opportunity for new entrants looking to invest in India. “This way, they will be able to minimize their investment and fast-forward the launch of their products in the Indian market," he added.

    Great Wall is expected to enter the Indian market with its Haval brand of SUVs.

    Queries sent to MG Motor India and Great Wall Motors on 6 November, remained unanswered till press time.

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    Published: 10 Nov 2019, 11:02 PM IST
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