China’s Great Wall to buy General Motors plant in India

Great Wall Motor

Chinese automaker Great Wall Motors has agreed to purchase General Motors’ auto plant in India, the companies stated on Friday, as the Chinese automaker expands overseas given slowing domestic demand.

The deal, which is expected to be finished by the second half of 2020, will affect Great Wall’s plans to build and sell cars in India and put to an end to the GM’s manufacturing operations in the country.

People knowledgeable about the deal informed Reuters earlier on Friday that the two companies had agreed on the sale, with one of the sources stating that Great Wall is likely to pay around $250 million to $300 million to get the plant.

“The Indian market has great potential, rapid economic growth, and a good investment environment. Entering the Indian market is an important step for Great Wall Motors’ global strategy,” stated Liu Xiangshang, vice president, global strategy at Great Wall Motors.

Great Wall, one of the biggest sellers of sports-utility vehicles (SUV) in China, prepares to enter India with its Haval and electric vehicle brands and will make declaration of detailed plans at the Delhi auto show in February, Liu stated.

Chinese automakers are speeding up their plans to construct cars in India to combat sluggish sales at home and have been encouraged by the positive results of rival SAIC Motor in the country, sources informed Reuters.

Although car sales in India are also stuttering, the auto industry of the country is expected to become the world’s third-biggest by 2026, behind China and the United States, according to consultancy LMC Automotive.

Fiat Chrysler, Ford Motor and General Motors are reducing their operations in India after battling it out in one of the world’s most competitive markets, which is dominated by smaller, low-cost cars made by Maruti Suzuki and Hyundai Motor, thus reducing enough chances for American automakers to attract enough customers.

General Motors, which stopped selling cars in India at the end of 2017, has already sold its other plant to SAIC Motor, where the Chinese automaker constructs cars under its British brand, MG Motor.

Although the American automaker keeps building small cars for export at its plant located Talegaon in Maharashtra state, it has been finding strategic options for the site, Julian Blissett, senior vice president, GM International Operations stated.

“Our decision to cease production at Talegaon is based on GM’s global strategy and optimization of our manufacturing footprint across the world,” Blissett stated, adding that the company will offer support to workers affected by the decision.

Great Wall could be upgrading and modifying GM’s plant to fulfill its needs and set up a base for its providers, said one of the sources, adding that the automaker expects to start production within a year.

The plant is expected to have a yearly production capacity of about 150,000-160,000 vehicles, the source stated.

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