SAIC announces over Rs 2,000 crore investment in India operations

SAIC is in the final stages of acquiring the Halol factory from GM India after which the decks will be cleared for the Chinese carmaker to enter India under the MG brand. SAIC plans to initially invest over Rs 2,000 crore to upgrade the Halol facilities, and launch a wide range of MG products.

Speaking exclusively to Autocar India, Rajeev Chaba, President and managing director of MG Motor India, the fully owned Indian subsidiary of SAIC, confirmed his company’s plans. “Our proposed investment is going to be over Rs 2,000 crore in the first phase which will be needed to refurbish our Halol plant, which we are now on the verge of taking over. This investment will also be used to increase the plant’s capacity from the current 60,000 to 80,000 units, which we believe is sufficient to serve the Indian market for the next five years.”

Chinese automakers are known for their low-cost structure and hence SAIC’s strategy is to leverage this strength, to gain a price advantage over other global automakers in the price sensitive Indian market. “I think we are quite sure of meeting the cost targets the way the Indian consumers want. In fact, I would like to believe this is going to be our strength in India” says Chaba who is also quick to point that low-cost does not imply low quality. “At SAIC, we have a very lean and very cost-effective manufacturing process with global quality. We export vehicles from SAIC’s joint ventures to Germany and America. So, in terms of cost and in terms of quality, I think we are world class there’s no doubt about that,” says Chaba.

However, to be truly cost-competitive, SAIC is planning an ambitious localisation programme, which is where a big chunk of the initial investment will be deployed. “We are committed to bringing a lot of suppliers from overseas and establish them within the Halol area and within our plant. That will also help in terms of inventory cost as well as localisation,” says Chaba.

According to company sources, the first model will be launched with a local content level as high as 75 percent and this could rise to 90 percent beyond 2022, depending on production volumes.

Chaba is noncommittal about the models SAIC will first launch. “Everything is on the table, in terms of shape and size. Luckily, we have a very good, compelling product range relevant to India. So, we are evaluating our first pick right now, but I can tell you that we will be very careful in choosing the relevant products for the market. We haven’t decided yet, but yes, we will launch two products in two years. Our first launch would be in 2019 and the second will be in 2020,” he stated.

Industry sources, however, reveal that the first model from SAIC is likely to be a small SUV that will compete with the Creta. This could be followed by a small MPV and a hatchback. Chaba confirms that MG Motor India has the option of picking products from any of the SAIC brands for the India line-up. “We can go to any of our brands to choose products that suit consumer requirement. If we are going for a joint venture, it’s not going to be as simple just to pick up a product because it depends on agreements and other such things, but we have the option to look at that as well.”

SAIC’s in-house brands include Maxus, Roewe and MG, while the joint venture with Wuling Motors has brands like Wuling and Baojun.