Gasgoo.com (Shanghai October 22) - General Motors has increased its controlling stake of the Indian joint venture company it established in partnership with SAIC Group to 91 percent, China Business News reported today. The news means that GM will once again have the final say on decisions made for the JV.
Several analysts take the news as a sign that the joint partnership method between GM and SAIC, which was modeled on the SAIC-GM-Wuling JV in China, was not yielding anticipated results. However, representatives from SAIC-GM-Wuling deny that the decision will alter the JV's plans to bring over Wuling brand vehicles to India.
Zhang Junyi, executive principal of Roland Berger Strategy Consultants in Shanghai, believes that the move will not greatly affect SAIC, as India is not its primary market. He points out that SAIC's export volume to India is relatively small, adding that the JV was more of a learning opportunity for the manufacturer.
SAIC-GM-Wuling's strategy of manufacturing low cost, high quality vehicles has allowed it to lead the microvan market in China. This performance has elevated the importance of the Wuling brand in GM's global sales strategy.
In 2009, the same year SAIC and GM established a joint investment company in Hong Kong, GM decided to begin bringing Wuling vehicles to India, where they were rebadged as Chevrolets. Furthermore, SAIC-GM-Wuling Vice President Yao Zuoping was brought over to head the Indian JV, bringing along with him technological staff from Wuling. GM hoped that it could replicate the success it had with Wuling in China in India, which would then be used as a blueprint for other foreign markets. SAIC, for its part, aimed to gain valuable overseas sales experience.
However, in the three years that followed, the JV failed to bring in the sales results many had hoped to see. Cultural differences between GM and SAIC's managerial staffs hindered progress even further.
To date, SAIC-GM-Wuling's products are available in over 30 countries in Latin America, Africa, the Middle East, Southeast Asia and other regions. The JV aims to export two million vehicles in 2015.
