GM SAIC tie up to enter LCV space in India

China-based Shanghai Automotive Industry Corporation (SAIC) and General Motors (GM) have recently entered into a tie-up to expand their cooperation in Asia.

SAIC and GM, which currently operate eight joint ventures in China, have formed a new 50-50 joint venture investment company, General Motors SAIC Investment. Situated in Hong Kong, it will facilitate their expansion efforts. Both the companies also announced plans to leverage their resources to support expansion in emerging markets, beginning with India, according to a media release.

Based on the automotive industry’s long-term potential for growth in India, SAIC and GM have formulated a joint strategy for investment in the country. They will utilise GM’s two vehicle-manufacturing plants and a powertrain facility in India along with the US automaker’s nationwide distribution network in the formation of a new joint venture.

Under the agreement, small cars from Shanghai GM and mini-commercial vehicles from SAIC-GM-Wuling — SAIC and GM’s manufacturing joint ventures in China — will be produced and sold in India. These products will join GM’s global vehicles, allowing GM India to quickly add its entries into the growing market segments. The establishment of the India joint venture is expected to be finalised in the first quarter of 2010. According to GM, the additional models and potential volume growth will result in the creation of more jobs in India.
Commenting on the development, President and Managing Director, GM India, Karl Slym said, ‘By combining the outstanding resources of GM in India with those of our partners in China, Korea and across the globe, we can respond faster to the evolving domestic market than ever before and also have the products to support our export desires. This is an excellent opportunity for GM India and the tie up will enable us to offer new and exciting products faster and in a greater number of segments to our customers in India.’

‘This will also give us an opportunity to utilise and expand our manufacturing capacities as we introduce additional products that are tailored to the needs of local vehicle buyers and local driving conditions. In addition, it will also create more employment opportunities locally and generate additional revenues from exports,’ he said.

Emerging Opportunities

‘Changes in the worldwide economy have created new opportunities in emerging markets,’ Chairman, SAIC, Hu Maoyuan said. ‘By leveraging our individual assets and those of our China joint ventures, SAIC and GM are in a strong position to introduce competitive products outside China that will satisfy the needs of consumers in India and other high-potential global markets.’ he added.

Both companies have also reached an agreement for GM to transfer a percent of its stake in Shanghai GM to SAIC Motor. This will assist China’s leading listed automotive company in consolidating Shanghai GM revenue into SAIC Motor, which will provide investors a clear understanding of its business. Shanghai GM management will continue to operate with the existing joint management structure and oversee operations of the joint venture.

‘Over the past decade, SAIC and GM have created one of the world’s most successful automotive industry partnerships,’ newly appointed President, GM Europe, Nick Reilly said. ‘Both companies felt this was the proper time to deepen cooperation beyond China’s borders in order to enhance our partnership as part of our individual companies’ long-term growth strategies,’ he added.