GM India & Chinese company make car in joint venture

For GM India chief Karl Slym, the expansion of the US auto giant's 12-year alliance with its Chinese partner SAIC Motor to tap India's burgeoning vehicle market is win-win for both sides. The two companies announced in December a joint venture with an initial focus on selling mini- commercial vehicles and inexpensive, entry-level cars in India that will later embrace other Asian emerging markets. 'Our first business move will be in India but it won't be the last — we will be spreading to other areas in Asia. We've made a commitment to expand in emerging markets,' Slym told the AFP in an interview. 'There is a big benefit to SAIC to be able to spread its business outside of China. There is also a big benefit for us to partner with them,' Slym said. In China, where General Motors entered in 1996, the Detroit-based company is the second largest automaker, helped by its partnership with China's biggest carmaker, Shanghai Automotive Industry Corp, or SAIC. GM, which is undergoing a drastic restructuring after being bailed out by the US government, is expected to post sales in China of 1.4 million vehicles this year. But in India, Asia's third-largest car market after China and Japan, where Japanese-owned Maruti Suzuki holds a commanding leadership position, GM has been slower out of the starting blocks. The US auto company, which started selling its Chevrolet marque in India only in 2003, is the fifth-largest carmaker in the country. It sold 67,500 vehicles last year, up 9.5 per cent from the previous year. Analysts see the 50:50 tie-up in which SAIC is investing cash and GM is supplying its Indian plants and sales network as giving GM more resources to grab a bigger share of the Indian market. It also gives the Chinese carmaker its first foothold in India, furthering its aspirations of being an international player. India, with its nearly 1.2 billion population, is one of the world's last remaining big-growth markets for global automakers like GM, Ford, Toyota, Hyundai and Honda as they grapple with a wrenching slump in developed markets. Indian car sales are expected to cross two million units next year. At next week's Auto Expo in New Delhi, GM will unveil its compact hatchback Chevrolet Beat, its latest entry in India, where small cars make up 80 per cent of the market. Lately, GM's sales volumes in India have been picking up with the company clocking a 60 per cent year-on-year increase in sales in November— a monthly record. 'GM has really reached a point now where we' re at a tipping point in India and the SAIC tie-up will help continue this growth,' Slym said. Recently, the new joint venture announced an investment of $650 million for the first phase of its operations in India on top of the one billion dollars GM has already invested since it entered the country. The production capacity of GM stands now at around 60,000 units a year. It expects that to rise to 250,000 units by 2012. Under the joint venture, GM and SAIC will roll out small cars from GM's Chinese product offerings along with offerings from GM's existing plants in India.