Chinese automakers eye big business in India
(chinatrucks.com, Nov. 10, 2009)The entry of SAIC Motor Corporation (better known as Shanghai Auto) into the Indian market a few weeks from now is a clear signal that the Chinese are serious about going global.
SAIC is learnt to have finalised a deal with General Motors where it will pick up a 50 per cent stake in its Indian arm. In the process, the company will bring to this part of the world light commercial vehicles which will compete with established players such as Tata Motors, Mahindra & Mahindra and Piaggio.
Just a few weeks earlier, Premier Ltd (the former Premier Automobiles, one of India's old carmakers) entered into a pact with the Zotye group of China to put together and retail its compact sport-utility vehicle in India. While the product will sport the Premier badge, Zotye will also end up building its brand here in the process.
Nissan, which is getting ready with its small car for India, has indicated that certain parts like the engine control unit and headlamps will be sourced from China. As sources say, this is not a trifling matter since the engine is one of the most critical components in a car. Nissan believes it makes sense because it has already achieved economies of scale in China which will help its other global operations, particularly India and Thailand, from the viewpoint of cost-control.
Till a few years ago, not many people took the Chinese seriously. When some Indian automakers began to fit their vehicles with parts from China, the first reaction was that these were cheap and would not last. There were concerns, though, that this cost structure could put Indian ancillary suppliers under pressure and the tyre industry, in particular, was (and continues to be) concerned about cheaper Chinese imports.
At one level, this was still not a major cause for concern as it only concerned a clutch of auto components. And even when companies such as the Aurangabad-based Endurance tied up with Wanfeng of China to manufacture alloy wheels here, there was comfort in the fact that the Indian partner would have a bigger role to play.
Global attention
However, the last few months, since the Lehman crisis broke out in 2008, have clearly shifted global attention towards China. A tottering GM sold its Hummer business to Tengzhong, a Chinese construction equipment maker. A few weeks ago, Ford announced that Geely Automotive of China was its preferred choice to buy out its Volvo Cars division in Sweden. This could have implications for India where Volvo Cars is already present.
Now, it is learnt that multinationals operating in China with local partners (the joint venture route is mandatory there for cars, unlike India, where the foreign partner will not be allowed a majority stake) will now have to set up another company with a local R&D base. Clearly, the goal is for local carmakers in China to improve their manufacturing standards to take on the world.
What does all this imply for India's automotive industry? Sources say that the coming years will see more and more Chinese companies enter this market and compete on their biggest advantage which is lower costs. “The challenge could come in the light truck segment and even cheaper cars. There is no threat on the two-wheeler side since the likes of Hero Honda, Bajaj Auto and TVS Motor are well established," they add.
Where the Chinese will try and make a dent is at the lower end of the pyramid where affordable products can generate demand. The Wuling trucks (from GM India and SAIC) will be the acid test as also Premier’s Rio compact SUV. The lessons learnt will be used to make products that could be even more relevant to the Indian consumer.
Indian companies such as Mahindra & Mahindra and Bajaj Auto are also using China to make tractors and two-wheelers (for markets like Africa), while component makers such as Bharat Forge and Sundram Fasteners see good business potential in terms of servicing bigger multinationals.
For the moment, the Chinese are roaring ahead with monthly car sale of a million units which is marginally lower than what India produces annually.
Views:0
- SAIC MAXUS' Overseas Sales Jumped by 129% YOY to 6940 Units in March 2022-04-12
- 440 SAIC Light-duty Trucks Delivered to Overseas Market 2022-01-07
- Top Ten Dump Truck Players in November 2021-12-30
- SAIC Maxus Advances in North American Market 2021-12-22
- SAIC Light Truck EH500 Electric Sanitation Vehicle Obtains EU Certificate 2021-11-10
- SAIC Maxus' Sales Volume for Sep. Reached Record 17,684 Units, Up 25% YOY 2021-10-09
- SAIC Hongyan to Build World's First Production Base for Hydrogen-powered Trucks 2021-07-22
- MAXUS and Harris Group Supply DPD UK with 750 Electric Vans 2021-06-24
- SAIC Maxus Export Volume Jumped by 16.92% in 2020 2021-01-06
- SAIC Maxus Launches Its T70 Pickup with Four Editions Available 2020-12-17
Submit Your Requirements, We Are Always At Your Service.
- BYD Stopped the Production of Fuel Vehicles
- Geely Began Test Runs of Green E-methanol Vehicles in Danmark
- 2022 SANY Global Dealer Summit Was Held Successfully Online
- BYD and Shell Partner on EV Charging across China and Europe
- Daimler Truck Significantly Increase Sales, Revenue and Net Profit in 2021
- Scania Year-end Report January-December 2021
- Hyundai Motor and Iveco Group Sign MOU to Explore Future Collaboration
- GAUSSIN Enters China, the Largest Truck Market in the World
- Over 1,200 Hydrogen-powered Vehicles Deployed for the Beijing Winter Olympics
- Chinese New Year Holiday Closure Notice
- China's Truck Exports Grew by 30% YOY to 63490 Units in January-February
- China's New Energy Heavy Trucks Grew Despite an Overall Slump
- Heavy-duty Truck sales in China Fell by 54% to 54,000 units in February
- SINOTRUK Achieves Sales of 27,725 Vehicles in January, 2022
- China’s Domestic Tractor Sales Exceed 40,000 Units in January
- 2021 JAC International Pickup Export Performance
- JAC Achieved a Great Result in 2021
- China's Truck Export in 2021 Reached a 10-year Peak
- Heavy-duty Truck Sales in China Fall 57 Percent on Year in January
- China Recorded Sales of 645000 Tractors in 2021