MG Motor moves closer to India entry

China’s largest automaker SAIC Motor Corp plans to enter the fast growing Indian automotive market with cars from its subsidiary MG Motor. Globally, the company's portfolio ranges from hatchbacks, sedans to compact SUVs, and the Chinese carmaker could have a cost advantage over its other global counterparts such as VW, Toyota and Honda.

Although not confirmed, the company could look at expanding its reach by tapping into GM dealership network in India. SAIC, which acquired British marquee MG Rover after its collapse over a decade ago, has reportedly even registered its subsidiary in the country as 'MG Motor India'.

In fact, SAIC has been in talks with General Motors for a while now to acquire General Motor’s Halol plant in Gujarat. The deal even came closer to fruition earlier this year when the Competition Commission of India cleared the proposed acquisition.

However, SAIC is yet to officially sign a formal agreement to acquire the plant, according to an official statement. "It is clarified that SAIC has not signed any formal agreement with GM for the Halol Plant. However, S‎AIC's decision to enter into the Indian market remains unchanged and the company continues to evaluate various options to set up a car manufacturing plant in India as early as possible."

The deal to acquire GM's Halol plant is subject to GM’s submission of all government approvals, settlement of labour and all other pending issues by GM, the statement added.

GM India recently announced that it would cease production at its Halol facility by April 28, 2017. In line with its decision to stop production at Halol, which was set up in June 1996, GM was scouting for a buyer. Around end-2016, it is learnt that a subsidiary of SAIC Motor Corp applied to the Competition Commission of India to acquire these assets of GM India.

GM India, which currently produces the Beat, Sail and the Cruze in its Talegaon plant, and the Tavera in Halol, will stop producing the Tavera (one of its high margin models) as it ceases operations at the plant later this month.

Having failed to crack the Indian market, GM has put on hold its planned investments on new models for India as the company undertakes a full review of its future product portfolio for the country.

The Halol plant has an annual manufacturing capacity of over 1,30,000 units, while Talegaon is reported to manufacture over 1,60,000 units. Both plants have a very low capacity utilisation and by selling off the Halol plant, the carmaker will aim to strengthen its operations at Talegaon and turn around its volumes in India.