GM turns to China to crack India’s tough car market

Employees work inside the General Motors plant in Talegaon, about 118 km (73 miles) from Mumbai September 4, 2012.
REUTERS/Danish Siddiqui

Reuters on 05SEP12 reports General Motors Co beginning the initial production of its first ever Chinese-designed car for the Indian market this week, a major step for the U.S. automaker as it tries to scale up in a market where foreign companies have struggled.

The compact Sail, sold as a sedan and hatchback, will go on sale next month as the first model designed by GM’s Chinese partner SAIC Motor Corp, the president of GM India told Reuters in an interview at a factory in western India.

“What (SAIC) bring to us is more of a regional focus and more of an emerging market focus,” GM India’s Lowell Paddock said. “Sail is in some ways perhaps the first vehicle designed with primarily Asian customer requirements.”

SAIC holds a 50 percent stake in the Indian unit. A larger passenger van from SAIC’s stable will begin production in India by the end of 2012.

Unlike in China, where GM and Volkswagen AG top the passenger vehicle market with a combined 30 percent share, all foreign automakers combined — excluding Hyundai — account for less than 25 percent of the Indian market, despite billions of dollars in investment and decades of toil.

I’m not entirely certain how Reuters’ so called analysts were calling out those percentages, but they’re cetainly erroneous. As observed, Japanese manufacturers alone account for almost 50 per cent of the market. It’s as if Reuters is leaving out Suzuki altogether despite the company’s 50-50 joint venture with Maruti (of GOI company):

Regardless of calculations, there may be areas for growth in the India’s automobile sector. According to the Society of Indian Automobile Manufacturers, approximately 3.43 million new cars, including commercial vehicles, were sold in India in the 2011 fiscal year, a 7.6 percent increase from the previous year.

Of course, those gains weren’t nearly what companies were accustom to as sales growth rates of about 20 percent flourished for two consecutive years in fiscal years 2009 and 2010. However, passenger car sales, which account for about 80 percent of all vehicles, decreased due to an increase in car loan interest rates and rising gasoline prices.

That said, if you live in India, this may be a blessing in disguise as increased traffic on already congested roads can add hours on to your journey. Not to mention that India lacks major parking areas in most of its metropolitans.

(And just so we’re clear, the parking deck shown in the recent mission impossible ghost protocol movie does not in any way, shape, or form exist in India. Although, I wish it did)

Reuters 05SEP12

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