Top Chinese carmakers plot major push into India

Wed Apr 6, 2016 4:44am EDT
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By Aditi Shah and Jake Spring

NEW DELHI/BEIJING (Reuters) - China's top carmaker SAIC Motor Corp (600104.SS: Quote) and Great Wall Motor (601633.SS: Quote), its biggest maker of SUVs, are spearheading the country's first major push into India, one of the world's fastest growing auto markets, as growth at home stagnates.

The entry is late and risky - global carmakers like Volkswagen AG (VOWG_p.DE: Quote), Ford Motor (F.N: Quote) and General Motors (GM.N: Quote) have struggled to push sales in the cost conscious Indian market despite being here for more than a decade. Chinese cars also suffer from perceptions of poor quality in India.

While they plan to woo Indian buyers with their no-frills cars and cut-price SUVs, Chinese manufacturers will compete head on with established carmakers like Suzuki Motor (7269.T: Quote) and Hyundai Motor (005380.KS: Quote) that dominate many markets in Southeast Asia.

Even so, India offers one of the last frontiers of growth - by 2020 the country is likely to become the world's third-largest car market, from fifth place, with annual sales nearly doubling to 5 million vehicles from 2.7 million in 2015.

SAIC and Great Wall are in separate talks with the state government of Maharashtra in western India to set up a factory in the auto hub of Pune city, the state industries minister told Reuters.

A source close to SAIC said the company is considering Pune city among other locations. The automaker plans to set up a factory in India within the next three years and is in the early stages of researching such a move, the person said.

"The market potential of India is huge," said the source.

For SAIC, the maker of marquee MG and Roewe cars, India is next on the agenda after entering Indonesia and would happen before they try to enter Russia, other European nations or the United States.   Continued...

An employee works on an assembly line at an automobile factory of SAIC Motor in Shanghai in this April 20, 2012 file photo. REUTERS/Aly Song/Files