Chinese automobile and component manufacturers are queuing up to drive into the Indian market, second only to their own in pace of growth, with the intention of using it as a low-cost export base.
The Indian automobile industry posted its best-ever performance in May with a 30% growth in car sales on new launches and increased consumer spending.
Chinese companies like SAIC, Foton, FAW, Chery, Geely and Great Wall have lined up everything from light minivans to cars, heavy-duty trucks and buses for introduction in India. While some of them, like SAIC and FAW are routing their India entry through their global alliance, others are on the lookout for Indian partners.
Chinese companies have historically operated through joint ventures, says Frost and Sullivan transportation and automotive senior director VG Ramakrishnan.
GM India, for instance, will introduce models from its three-way alliance in China with SAIC and Wuling. SAIC, which has a joint venture with General Motors in China, has bought 50% of the US company's Indian subsidiary, General Motors India.
Apart from minivans and light commercial vehicles from the Wuling range, GM is looking at introducing trucks from its other Chinese JV partner, FAW. "We have selected a few light commercial vehicles for introduction in India. We are open to other options that could make sense down the road," said Karl Slym, president, GM India.
Foton is another Chinese company eyeing an opportunity in India. It intends to invest around $200 million for a 100,000-unit factory using locally-sourced components.
In its proposal to Indian suppliers, Foton said it will introduce not just its tractor trailors and heavy duty trucks from the Auman and Aumark range but also pick-ups and SUVs. Medium-sized and small vans will be assembled locally, said the presentation.
Chery, Geely and Great Wall are in advanced talks with ICML, the car division of tractor-maker Sonalika, said a person with direct knowledge of the development. ICML's CEO Deepak Mittal, however, refused to comment.
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