GM and SAIC set to unveil India tie-up

General Motors and China’s SAIC Motor Corp are poised to announce a tie-up on Friday for the sale of vehicles in India, in a significant step in China’s efforts to gain a foothold in one of the for world’s largest emerging markets for automobiles.

GM and SAIC are expected to say they plan to bring some of the Chinese producer’s light commercial vehicles to India, including minivans and mini-trucks, a segment dominated by domestic market leader Tata Motors.
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“SAIC is looking for a greater role in the global markets and GM wants to enhance its portfolio by offering vehicles that are coming from a more cost-effective platform,” said Mohit Arora, JD Power Asia-Pacific senior director.

Trading of SAIC shares in Shanghai was suspended on Thursday after the company said in a statement to the Shanghai stock exchange that it planned a “major asset restructuring” and would hold a board meeting before December 9 to discuss the move.

The announcement led to speculation over whether SAIC was planning to alter the shareholding structure of some of its joint ventures in China, including a 50-50 joint venture with GM, which has had a record year in China.

GM has sold more than 1.6m cars in China through its joint ventures this year, a 64 per cent increase on the same period in 2008. November GM sales were up 109 per cent over the year-earlier period.

SAIC and GM have been talking about working together in India for several months. But SAIC has previously been reluctant to expand in international markets after its majority investment in Ssangyong, the South Korean automaker, recently ended in embarrassment when Ssangyong went into receivership.

India’s car market has roared back to life in recent months on the back of annualised gross domestic product growth of 7.9 per cent in the three months to September.

Tata Motors, India’s biggest automaker, in November reported an 81 per cent increase in commercial vehicle sales over a year earlier and a 48 per cent rise in domestic car sales.

India’s biggest passenger car maker, Maruti Suzuki, reported a rise in sales of 67 per cent from a year earlier while utility vehicle producer Mahindra & Mahindra’s passenger car sales almost doubled

GM’s India sales rose 65 per cent during the same month compared with the same period a year earlier, to 7,118 units.

India’s automotive market, while growing rapidly, is also one of the world’s most competitive as producers jostle to release the lowest cost cars and light trucks.

GM India declined to comment on SAIC yesterday.

One person familiar with the matter said: “There will be an announcement on this tomorrow.”