Chinese auto giant SAIC may buy GM's Gujarat plant to enter India
25 January 2016
Chinese automobile giant SAIC Motor Corp is likely to take control of the Gujarat factory of the US car maker General Motors, in a bid to start car production in India.
SAIC, which partners General Motors in China is is expected to sell a minor stake that it holds in GM's India operations, after getting control of the plant in Halol, Gujarat.
General Motors India, which has suffered around Rs4,000 crore losses in its operations in the country, decided to shut shop in Gujarat. GM will vacate the plant by July and focuses on operations at its plant in Talegaon, Maharashtra. ''The company is in advanced stages of negotiations with GM on the matter,'' The Times of India quoted a top industry official as saying.
If the deal goes through, SAIC could be the first Chinese auto manufacturer to start operations in India.
SAIC is expected to begin its India operations by contract-manufacturing GM India's models that are already being made at Halol, sources said. GM makes 'Cruze' sedan and 'Tavera' and 'Enjoy' MPVs at the factory. The two companies have also kept top officials of the Gujarat government in the loop as they look to strike a deal.
General Motors had recently decided to close its Halol plant following losses and focus on its manufacturing plant at Talegaon in Maharashtra.
Halol, which is General Motors's first plant in India, has an annual production capacity of 1.1 lakh cars and employs around 1,100 workers.
The plant makes 'Cruze' sedan and 'Tavera' and 'Enjoy' MPVs.
But the Detroit-based car maker has yet not been able to post profit. It is estimated to have accumulated losses of around Rs 4,000 crore since it put up its Halol plant.
The Times of India today reported that SAIC may start its operations by contract manufacturing cars for GM India and the Gujarat government is being kept abreast of the talks.
GM India is said to be working towards passing on the fiscal incentives from the state government to the new buyers, the report added.
General Motors has a current market share of just 1.2 per cent in the passenger vehicle segment in India. The company has reported a 38 per cent fall in sales, with annual sales of 24,479 units during the 2015-16 fiscal while the passenger car market in India rose almost 10 per cent.