China calls, no news on auto front

China’s President, Xi Jinping, is visiting India and deals worth $3.4 billion have already been signed. So far, there has been no indication of any substantial investment in the automotive space.

The elusive big-ticket entrant is Beiqi Foton Motor which was scheduled to commission a facility for commercial vehicles at Chakan . There has been no news on that front for nearly three years now. Likewise, there was talk within industry circles of Great Wall Motors planning to make SUVs in India.

China’s presence here, otherwise, has largely been confined to the spare parts space where Indian vehicle makers source them as a cost-effective option. While Foton’s entry is still awaited, it was not too long ago when one of the biggest Chinese automakers had drawn up an aggressive plan for India.

This was during the crisis of 2009 when Detroit’s automakers, with the exception of Ford, went bankrupt and a crisis loomed large. Thousands of miles away, the top management at General Motors’ India operations realised a lifeline was necessary if it had to get back on track. The company turned to its trusted ally of many years, SAIC Motor Corporation, for support and a new chapter kicked off in 2010.

According to this plan, SAIC would pick up 50 per cent in GM India and bring a bouquet of products here. This was the ideal route to creating a presence in India, the fastest growing automobile market after China. The GM-SAIC duo had already climbed to the top layer in China where Volkswagen (with its share of local partners including SAIC) was the leader and its fiercest competitor.

From the Chinese automaker’s point of view, India would be the launch pad for its overseas foray which would gradually grow to include Malaysia, Thailand and Indonesia. Senior officials had told Business Line during a visit to China that it was important to get the India business model in place in the first five years before contemplating an entry into other parts of Asia.

SAIC also believed that Maruti Suzuki and Hyundai Motor India were important benchmarks for the India partnership with GM since both companies had “competitive price points”. This was an important aspect especially for light commercial vehicles where there were strong local rivals.

The GM-SAIC plan was to have kicked off with the Wuling series of light pickups and multipurpose vehicles produced in China. These were already being shipped out to markets in Latin America under the Chevrolet badge.

From GM’s point of view, the partnership with SAIC was the best bet . “GM-SAIC is a strong partnership largely because of the capabilities both partners bring to the table. We are tightly aligned with our SAIC colleagues and when you look at the variety of products they can assist us with, we think those are vehicles which will do very well in the Indian market too,” former President & MD of GM India, Lowell Paddock, had said in early 2012.

The duo planned to bring a host of ‘value-focused' products into India and strongly believed the China success story could be replicated here.

“If you look at our growth in China, it has not happened by accident. It is because of capability, quality and the ability to move fast. The race is eventually going to go to those who can move the quickest and most efficiently,” Paddock had said.

By the end of the year, though, GM bought out 43 per cent of SAIC’s stake in the alliance which left the latter with just a minuscule seven per cent. The Chinese automaker had clearly changed its mind about India even though its alliance with GM continues to be strong back home.

What really triggered this volte-face especially when SAIC was so gung-ho just a couple of years earlier? For the moment, there is little indication that it will reconsider India which leaves only Foton as the sole Chinese contender in this part of the world.

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