The Hindu Business Line : Chinese cars may soon run on Indian roads

Riding high
Tie-up for group co could include stake sale
Plans to enter passenger car segment
May import components from China and assemble tractors in India

New Delhi , Jan. 13

Chinese cars could soon be running on Indian roads. Industry sources said leading Chinese automaker Chery Automobile Co, among other players, is in talks with the North India-based tractor major Sonalika Group to introduce its fast selling compact car QQ in India.

Mr L.D. Mittal, Chairman, Sonalika Group, confirmed that the company had been approached by a few Chinese players, though declining to comment on whether it included Chery.

The exteriors of QQ are similar to Chevrolet Spark which General Motors plans to introduce in India this year.

Industry analysts point out that if QQ is introduced in India it would be priced in the region of Rs 2.5-3 lakh. QQ in China comes with two engine options, 0.8 litre and 1.1 litre.

Chery vs GM

Chery Automobile, which had sales volume of 1,89,100 cars in 2005, recently reached a settlement with General Motors, which claimed that Chery's QQ small car was a copy of Chevrolet Spark. Incidentally, the Chinese carmaker is currently in discussions to build a small car for DaimlerChrysler and has also formed a manufacturing partnership with Fiat Auto.

It is also forming a joint venture with Argentine firm Grupo Socma to assemble the QQ compact cars for South America's Mercosur auto market.

Group co ventures

Sonalika Group's Mr Mittal said that the company is looking to enter the passenger car segment and a tie-up for group company International Cars and Motors Ltd could even include a strategic stake sale.

Mr Mittal added that its other group company International Tractors Ltd (ITL) is also looking at a tie-up with a Chinese firm. "We may be importing several major components from China and assemble a new tractor model here. This tractor will be priced very competitively," he added.

ITL, manufacturer of Sonalika brand of tractors, recently offloaded 5 per cent to Morgan Stanley. The company is also currently in talks to offload an additional 5 per cent to another private equity player, sources said.

Mr Mittal had earlier told Business Line that the company was looking to offload 10 per cent stake in ITL to private equity players, after which it will commence the necessary formalities for an initial public offering (IPO) in March.

The tractor firm has strategic investments by three firms, including two private equity firms, which collectively hold 32 per cent in ITL. This includes a 10 per cent stake each by Citigroup and 3i, while Japanese tractor maker Yanmar has about 12 per cent stake in the company.