Report – Chinese Automobile Manufacturers turn to India

Can the Cherry QQ, a copy of the Chevrolet Spark make it to India? We don't quite think it will.

The Chinese are finally making a dash to set-up shop India, not merely to sell their vehicles here but their ultimate plan is to use India’s low cost of production to export their vehicles. You see, India is second only to China when it comes to growth and Chinese manufacturers would like top cash in on this opportunity. In China, the demand always outruns the supply meaning Chinese manufacturers need massive plants to satisfy local demand and some more to export which is highly unlikely.

So their next best option is India and 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 (SAIC-GM for example), others are on the lookout for local partners.

The GM-SAIC-Wuling deal (SAIC has bought 50% of GM India) means that vehicles from Wuling and SAIC are not that far away. GM is also looking at introducing trucks from 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. “SAIC and GM both bought equal stakes in a holding company in Hong Kong which now owns GM India. Later we will expand this model to markets like Thailand, Indonesia and Malaysia,” said Joseph YH Liu, executive vice president, Shanghai General Motors. “SAIC wants to sell vehicles in India and learn how to build and source a vehicle in India which will give it cost competitiveness in export markets,” said Mr Liu. “India can be a good base for all of Asia, except China,” adds SAIC spokesperson Judy Xiangjun Zhu.

Next in line is Foton, which intends to invest $200 Million to set up a 100,000 capacity plant for introducing its range of tractor-trailers and heavy duty trucks from the Auman and Aumark range, LCVs and small to medium sized vans. Chery, Geely and Great Wall are in advanced talks with ICML, the car division of tractor-maker Sonalika, a person close to the source has said.

The Chinese face two hurdles – adopting to Indian regulations and Patent rights. While adopting to Indian regulations are easier (Cherry for example sells 500,000 QQ’s each year in 11 countries) and China’s CV norms are stricter than India’s. Patents will be a major hurdle as Cherry QQ is a cope of Chevrolet Spark and many other Chinese manufacturers imitate the style of successful manufacturers like BMW and Mercedes. Chinese want to use Indian as an export hub, something on the lies of Maruti Suzuki and Hyundai.

Not to be left behind, component manufacturers are also coming to India, like Yapp Zoom Automotive Systems, a 51:49 joint venture between Yangzhou-based Yapp Automotive Parts and Mumbai’s Zoom Developers which began production at its plastic fuel tank manufacturing facility at the Ford New Suppliers Park. Yapp Zoom Automotive has confirmed business from Ford for its Fiesta and Figo models. It is also the 100% supplier for VW (Polo) and Skoda (Fabia) and is in advanced level talks with other vehicle makers.

The Chinese certainly know what they are doing and looks like the Chinese wave is set to hit India very very soon. Local manufacturers, be warned.

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