SAIC may buy 50% stakes in GM India, join board also

Shanghai Automotive Industry Corporation (SAIC) is likely to pick up a 50% stake in GMI and will enter an alliance that will assemble SAIC’s light trucks in India and source components from China’s No. 1 car maker. SAIC may also be offered a position on the GM India (GMI) board, said a person with direct knowledge of the deal, which will give the Chinese firm a strong foothold in the second fastest growing car market in the world. He, however , did not divulge the financial details of the transaction.

GMI —is owned by GM, that makes small cars Chevrolet Aveo-Uva, Chevrolet Spark and the soon to be launched Chevrolet Beat. It  will also benefit from sourcing cheaper components from China. It will also be able to enter the high-growth light truck market with SAIC’s Wuling range of trucks. The alliance may possibly use GMI’s Talegaon manufacturing facility to roll out SAIC small trucks.

Though, GM India spokesman P Balendran declined to confirm the development, terming it as speculation.  “This gives us an opportunity to widen our product portfolio and introduce competitive products in the countries we operate. We keep announcing tie-ups whenever we sign any agreement with our partners,” he added. SAIC has been eager to establish a presence in India and is leveraging its equation with GM to form an alliance.

Politically, the deal could be opposed as  India’s relations with China continue their roller coaster ride. Hence, in the recent past, the government had objected to some investments from Chinese companies. But lawyers have a different take and say the government is unlikely to block a deal between car companies, which have no security implications. “China is a WTO signatory and the government cant block this deal unless for security reasons ,” said a Delhi-based lawyer specialising in WTO-related litigation.

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