MG Motor’s India plans take shape

MG Motor has started its India innings with an office in a five-star hotel in Gurugram.

It is known that China’s largest automaker, SAIC Motor Corporation, has been in talks with General Motors for a while now to acquire its Halol, Gujarat plant, and the deal even came closer to fruition earlier this year when the Competition Commission of India cleared the proposed acquisition.

SAIC Motor Corporation's Indian subsidiary is now in the process of setting up a team headed by former GM India head, Rajeev Chaba. P Balendran, another former GM India executive, is part of the core MG India team. Currently, the team works out of a leased space in a 5-star hotel in Gurugram called Crowne Plaza. 

It may be recollected that the Hong Kong-based SAIC HK Ltd, a subsidiary of SAIC Motor Corporation which imports and exports spare parts, had first filed a notice with the Competition Commission of India in mid-January 2017 to acquire GM India’s Halol plant.

SAIC now plans to enter the Indian passenger vehicle market, which has surpassed sales of 3 million units for the first time in 2016-17, 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 Volkswagen, Toyota and Honda.

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

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 130,000 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.