After Hector SUV’s success, more Chinese automakers eye India.
Automakers Great Wall Motor and Changan Automobile are accelerating plans to build cars in India following rival SAIC Motor’s first success in one of the world markets, three sources said.
Great Wall is finalising which SUVs it intends to make in India and running and buying a factory is seen as the ideal way to get up, including whether to kick its launch off the source told Reuters. Great Wall said it would make a statement next month but declined further comment. A spokesman for GM in Detroit said it was continuing to make vehicles for export.
“As we’ve said previously, we continue to explore options to improve utilisation of the plant. Changan, has held initial talks with suppliers and too, is currently scouting for a manufacturing base, sources said.
Changan declined to comment.
The companies see India as a chance to combat slowing sales in the home, which fell in November for a 17th month in a row. While car sales in India are stuttering, the market is expected to become the world’s third biggest by 2026, behind China and the United States, according to consultancy LMC Automotive The Chinese firms also expect to capitalise on openings left by international automakers like Fiat Chrysler, Ford Motor and GM that have scaled back plans in a market still dominated by smaller, low-cost automobiles created by Maruti Suzuki and Hyundai Motor.
There’s now a gap in competition and it may take a few years for some of the established carmakers to bring new products to the market,” said LMC Automotive’s Ammar Master. GM’s escape from India, as an instance, could help Great Wall get moving quickly and it’s been in talks to buy GM’s plant in Maharashtra, two of the sources said.
GM stopped selling cars in India in 2017 and has sold its other plant in Gujarat to SAIC, in which the Chinese automaker makes. India is part of Great Wall’s planned global expansion into South America, South Africa, Southeast Asia and Australia, and it also plans to export out of their to places such as Europe and the United States, said the source who’s conscious of its plans.
“The plant in India is expected to be the biggest for Great Wall outside of China,” the source said. Great Wall has hired a former executive from Maruti Suzuki, India’s largest carmaker and appointed a former executive from the India division of SAIC to liaise with the authorities.
“For global automakers, India is one of the numerous markets they are in but for the Chinese it is the first key market outside of home and hence the amount of dedication and investment will be proportionately high,” said the source. One of the biggest hurdles in India winning over buyers for whom cars are a prestige statement and will fight perceptions about the quality and reliability of Chinese goods, say analysts.
When they launched in India chinese smartphone makers such as Xiaomi Corp faced understanding issues but they dominate the marketplace. But, cars remain a significant outlay for many Indians and the Chinese brands will have to make their mark. “After the likes of Volkswagen and Ford start launching new models in India, the entrants from China could face tougher competition because a great deal of buyers in India are still very brand conscious,” said LMC’s Master.
Still, the success of SAIC’s Hector SUV has helped. Launched at the end of June it said it had sold more than 13,000 cars and plans to sell. “Fence sitters are getting in and have realised they could sell in India if the price and strategy is appropriate.”
Lessons from the India launch of SAIC include packing the car to distinguish it from rivals marketing the brand harshly and providing extended warranties to dispel doubts over reliability, analysts say. Another advantage for Chinese carmakers in the forthcoming years will be their EV experience. With the sale of EVs slowing in China they could deploy some of their current capacity in which the government is promoting fuel cars.
SAIC, which will soon launch an SUV in India, is scouting for a second manufacturing site and is expected to make a decision in early 2020, said a source conscious of its plans. SAIC didn’t respond to a request for comment though the head of its Indian branch said in November it had been working on an expansion plan and expected its total sales to hit 70,000 in 2021.