|12 February, 2020

China's carmakers could drive well in India

Suzuki Maruti accounts for roughly half of all passenger vehicle sales, suggesting there is room for others to share the spoils

Models pose next to Great Wall Motors (GWM) GWM R1 electric car at its pavilion at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020.

Models pose next to Great Wall Motors (GWM) GWM R1 electric car at its pavilion at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020.

Reuters/Anushree Fadnavis

HONG KONG - Chinese automakers are driving west looking for growth. As sales at home stall, Great Wall Motor has announced plans to invest $1 billion to enter India and to start production locally. Others will follow. Although the likes of Ford, GM and Fiat Chrysler have applied the brake, retreating in recent months, Chinese carmakers will have an edge over their sub-continental rivals as consumers look beyond small, affordable rides.

Sales of passenger cars contracted sharply in India last year on the back of new insurance and emissions standards but the potential for long-term growth is staggering: there were only around 20 cars for every 1000 people as of 2018. Unlike in China, where hundreds of competitors vie for attention, the industry is concentrated – Suzuki Maruti accounts for roughly half of all passenger vehicle sales, suggesting there is room for others to share the spoils.

That’s why the $9 billion Great Wall and peers like SAIC Motor and FAW Car were among 300 Chinese groups that signed up for the Society of Indian Automobile Manufacturers’ Motor Show in Greater Noida in Uttar Pradesh state this month. In January, Great Wall Motor snapped up GM’s old factory when the Americans went into reverse.

Chinese carmakers could make their mark. They are more adept are making spacious sports utility vehicles, which are popular in China and increasingly appeal to affluent Indians ready to move on from more compact sedans. The latter remain best-sellers for domestic brands; however, utility vehicle sales, including SUVs, rose by 5% last year, despite the downturn, Society of Indian Automobile Manufacturers figures show. Western rivals had similar dreams to win the segment but the Chinese are able and willing to make cheaper cars, that will help the newcomers gain traction.

Prime Minister Narendra Modi’s drive for cleaner vehicles could be to their advantage, too. Beijing’s war on smog has accelerated the development of electric vehicles and hybrids in China. If Indians take to the new technology, the Chinese will be well-placed to compete with locals like Tata Motors which is also now launching battery powered cars. The road trip looks worthwhile.

On Twitter https://twitter.com/KatrinaHamlin 

CONTEXT NEWS

- Great Wall Motor will invest $1 billion in India on manufacturing facilities and research and development, the company said on Feb. 5.

(Editing by Una Galani and Sharon Lam)

© Reuters News 2020

More From Business