China's top auto maker SAIC , which is in the process of entering Indian car market by acquiring General Motors’ Halol plant, may also use the latter’s sales network to sell vehicles in India. The two companies are learnt to be looking at more synergies such as sharing office spaces, etc.
GM’s dealerships in India have not been doing adequate volumes due to a decline in demand even as the domestic car market continues to expand. As a result, the company and its dealers have not been making profits. “SAIC and GM are discussing the possibility of using the latter’s marketing and sales infrastructure. Such an arrangement will be a positive for those who have invested in setting up GM’s dealerships. For SAIC too, it will translate into availability of ready sales network,” said an industry executive aware of the discussions. SAIC did not respond to queries.
Data available with Siam shows GM sold 20,888 vehicles in India between April and December last year, a decline of more than 14 per cent compared to the corresponding period of previous year. During this period, the overall industry grew 8.6 per cent. GM has a tiny market share of less than a per cent in the growing Indian market. However, it has more than doubled its exports to 50,000 vehicles in the same period.
SAIC is GM's joint venture partner in China. The Chinese carmaker had helped GM’s India unit by buying a stake in it a few years before. In 2015, American auto major GM decided to shut down its Halol plant (in Gujarat) and consolidate all production at the second Indian unit in Maharashtra’s Talegaon.
Halol has a capacity to make 110,000 cars a year while Talegaon can make 170,000 vehicles. GM decided to sell the Halol unit to SAIC which is now set to become the first Chinese company to produce cars in India, the world’s fifth largest car market. SAIC is also in talks with governments of states like Gujarat and Maharashtra for a greenfield manufacturing unit which will involve fiscal incentives and allow a cost competitive manufacturing.
SAIC, formerly Shanghai Automotive Industrial Corporation has roped in Rajeev Chaba, former managing director of GM India. Chaba is tipped to become SAIC's country head in India. An India representative of SAIC confirmed that Chaba has come on board but did not specify his role. Chaba’s recent role was as the COO of Man Capital in UK and he had earlier served as MD of GM in North Africa and Egypt.
This will be another example of auto multinationals preferring to hire someone with an exposure in India to lead the business. Amit Kaushik, managing director for Detroit based automobile consultancy Urban Science in India said having someone with a right local experience as head enhances growth prospects.
Very recently, BMW has roped in Vikram Pawah as its India President and Audi has appointed Rahil Ansari (a person of Indian origin) as its India head. Pawah was earlier heading Harley Davidson’s India business while Ansari was head of global pricing for Audi genuine parts. Ansari had earlier worked as director of network development for Audi in India.