We all know that the Indian car market has been showing phenomenal growth of late. And, that is why the eagle-eyed Chinese auto and parts suppliers are looking for some narrow space through which they can get in and take control of the Indian market. Second only to its own in pace of growth, China has been dreaming of using India as a low-cost export base.
Indian auto sales went up 30 per cent in May. No wonder all this is happening. Chinese companies like SAIC, Foton, FAW, Chery, Geely and Great Wall have plans for everything, from light minivans to cars, heavy-duty trucks and buses, for introduction in India. A few like SAIC and FAW are trying their luck through their global alliance and others are on the lookout for Indian partners.
We have already heard that GM may take some Chinese help to bring in the Nano rival. GM India, SAIC and Wuling have bonded and SAIC has bought 50 per cent of the US car maker’s Indian subsidiary, General Motors India. So, SAIC will not find it too difficult to get in. It’s clear that LCVs and minivans from the Wuling range will be here any time, don’t you think so? GM is also looking at introducing new cars from its Chinese partner, FAW.
Another Chinese company, Foton has plans of investing around $200 million for a 100,000-unit factory using locally-sourced components. Foton will most likely introduce tractor trailors, heavy duty trucks from the Auman and Aumark range, pick-ups and SUVs in India. Medium-sized and small vans will be assembled locally. Speculation says Chery, Geely and Great Wall are also in advanced talks with ICML, the car division of tractor-maker Sonalika. ICML’s CEO Deepak Mittal, however, refused to comment.
Car makers possessing the advantage of low cost and scale have been looking at India as their Asian hub. Experts believe Indian regulations are not going to pose a major hurdle to Chinese companies. Given the fact that Chery Automobile sells around 5 lakh Chery QQs in about 11 countries, clearing motor vehicle norms in India is not an issue. Besides, China has more stringent commercial vehicle norms than India. However, with the recent controversy generated by Chery QQ, which is allegedly a design copy of GM’s Spark, patents may pose as a cause for concern.
Car sales in the current fiscal are estimated around 3 million units. But Chinese companies are not going to be satisfied with just the high sales. They also look at India as a low-cost but higher quality export hub, a business model that Maruti Suzuki and Hyundai have successfully adopted.
And yes, it’s not just the auto companies that are eyeing India, parts companies too are looking for potential partners. Yapp Zoom Automotive Systems, a 51:49 joint venture between Yangzhou-based Yapp Automotive Parts and Mumbai’s Zoom Developers, for example, began production at its plastic fuel tank manufacturing facility at the Ford New Suppliers Park early this month. Yapp Zoom Automotive has confirmed business from Ford for its Fiesta and Figo models. It is also the 100 per cent component supplier for VW Polo and Skoda Fabia and is in advanced level talks with other auto manufacturers.