General Motors expects a lot of action in India this decade with its Chinese ally, SAIC Motor Corp.

And this could just intensify, going by the report in German weekly Der Spiegel last week, which spoke of GM planning to increase capacity in low-cost countries.

According to the news magazine, the automaker would close its plants in Germany and the UK and meet additional demand by building more cars in India, Russia, China, Poland, Mexico and Brazil.

Der Spiegel had based its report from a GM document, ‘Global Assembly Footprint', which said the company would export 300,000 vehicles to Europe over the next 4-5 years from its facilities in China, Mexico and Korea.

Should this plan crystallise, India could end up becoming an important global production hub for GM.

Better equipped

The company has been around in this part of the world for over 15 years now but does not have anything substantial to show in terms of numbers and market share. However, it is betting big on its alliance with SAIC which is working like a charm in China and has contributed to catapulting GM to the top spot in the country.

There is every reason to believe that the American carmaker will be better equipped to handle the competitive Indian car arena with a partner which can contemplate big numbers at competitive costs. In addition, the present thinking for its European operations will give Indian ancillary suppliers a huge business opportunity.

This is only one part of the story. GM recently picked up a stake in PSA Peugeot Citroen which, in turn, had already made known its intent to invest in India. That decision has now been deferred with PSA up against a difficult market in Europe which prompted the move to join hands with GM.

There is no update yet on the French carmaker's India plans, but observers say GM could have a big role to play here. This is going by the recent PSA announcement that the duo could expand the scope of its alliance to include large vehicles, dual-clutch transmissions and a small car for emerging markets.

While there was no reference to India (the emphasis was actually on Latin America), it is likely that GM and PSA will explore options in this area.

These are still early days yet to look so far ahead, but GM clearly wants to make up for lost time in India. The partnership with SAIC is the first part of this comeback script. It is only after this is in place will other aspects of the growth plan come into the picture. There is also no telling if PSA will revive its India project once things are back on course in Europe.

> gmurali@thehindu.co.in

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