The Chinese car premier company Shanghai Automotive has already entered into a JV on 50:50 basis, with the General Motors India, for establishing car manufacture in India. Under this JV, SAIC has shelled out $500 million (Rs2350 crore) to GM India. This makes the net investment of GM in India to $1 billion (Rs4700 crore) ever since its entry into India in 1994. The net investment involves the establishment of Talegaon plant for vehicle and power trains, Halol plant for cars, Gurgaon office and an R&D wing at Bangalore, said the GM India’s VP.
The R&D wing is to remain as a 100% subsidiary of GM USA. The JV between GM and SAIC, on 50:50 basis, is christened as General Motors SAIC Investment Ltd with its base in Hong Kong. Under the pact, the companies will make use of the plants at Maharastra (Talegaon) and Gujarat (Talol) with an equity base of $100 million.
The units will begin making utility vehicles and cars for the domestic market. With an investment of $650 million for the initial phase of operations in India by 2011. The new pact paves way for the entry of two representatives into the board of GM India. Exports to parts of Asia will follow suit. GM has got 4% in domestic market with the production capacity of 60000 units a year which is expected to increase to 250000 units by 2012. The cars will be commonly branded Chevrolet while the utility vehicles will be branded under SAIC term with separate dealerships for cars and UVs.
Under the pact, the company will launch a new 800cc car, an entry-level, mid-size sedan from Wuling (local partner for GM-SAIC in China operations). There will be three CVs – small vans in the likes of Wagon R, pick-up vans (similar to Tata Ace) and muv (like Tata Sumo)- all from the SAIC product range.