By on October 20, 2012

Chinese products have dominated almost every industry – except of course the automobile industry. But this could easily change. Chinese made cars are improving at a rapid pace and could soon challenge more established car makers. The Chinese invasion will soon start in India, with General Motors launching the Sail hatchback. The Sail is the brainchild of GM’s  joint venture with  SAIC (Shanghai Automotive Industry Corporation), which is by far the largest Chinese car maker, and  which also happens to be GM’s joint venture partner for India.

The Chevrolet Sail is  the brand’s top seller in China. In September, Chevrolet sales in China were  56,166 units, 18,786  or 33 percent of which were generated by the Sail. The Cruze brought in sales of 18,338 units.

When I saw the Sail at the Indian Auto Expo earlier this year, I was disappointed. The styling is conservative and the interiors look outdated. GM’s Indian engineers have tweaked the car thoroughly to adapt it to Indian road conditions, and a diesel powertrain (a must for India) is part of the package. The 1.3-litre Multijet (Fiat-GM co-developed) produces 78 PS and 151 lb-ft. A 1.2-litre Gasoline engine is on offer too (86 PS, 83 lb-ft).

 

So how does this car drive? I was pleasantly surprised by the Sail. It doesn’t drive bad at all. Performance is good for city driving and interior space is easily the best in its class. There is ample amount of front and rear room. Handling is good but the steering is very vague, lacking feedback. Ride quality is amazing and the Sail eats away bad roads. Trunk capacity is good too. The Sail is a very practical vehicle which is certain to do well in India. A sedan version of the Sail and the Enjoy (CN-100) MPV, both SAIC products, will follow.

The Sail is being assembled at a GM plant in India. GM’s India business is jointly owned by GM and SAIC through a Hong Kong registered joint venture. A few days ago, it was announced that GM had bought back most of the shares in the jointly-owned India business. GM now holds 93 percent, seven percent are held by SAIC. According to Reuters, GM’s India car sales fell 21 percent in the first six months of the financial year that began in April,while overall industry car sales slipped 0.3 percent in the same period. GM sold 111,510 cars in India in 2011, less than a third of its total installed capacity.

According to data published by the Society of Indian Automobile Manufacturers (SIAM), Indians bought  2.6 million passenger vehicles in the 2011/2012 fiscal, and 800,000 commercial vehicles, for a grand total of  3.427 million motorvehicles. With 14 million motorized two and three-wheeler sold in the same period, the market already has a potential for 17 million units annually. With a population of 1.24 billion, India is seen as the “next China.”

Do you think Chinese car makers will make a formidable challenge to European and Japanese car makers in the future?

Faisal Ali Khan is the owner/operator of MotorBeam.com, a website covering the auto industry of India.

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32 Comments on “Chinese Invade India, GM-SAIC Launch Sail...”


  • avatar
    gslippy

    “Do you think Chinese car makers will make a formidable challenge to European and Japanese car makers in the future?”

    Yes, but only if there are fewer Chinese car makers. There are currently too many of them, and a consumer will want to know they can trust a few strong mfrs rather than numerous weaker ones.

    And as long as a Chinese-made vehicle is reasonably reliable (TBD) and affordable, this will provide strong competition to other entries.

  • avatar
    th009

    So will the Sail be built locally or imported from China? I believe GM India has lots of spare capacity …

  • avatar
    L'avventura

    The problem for Chinese exports has always been about branding. People will buy a Chevy but they won’t buy a car branded a Baojun or a Maxus. Chinese car brands have little to no brand recognition globally. It takes decades to cultivate a brand.

    Which is why Chinese companies like SAIC are using foreign brands to go overseas, this Chevy Sail is an example. But GM has been making moves to decouple their Asian growth strategy from SAIC.

    The big issue for Chinese cars is that Chinese labor is actually fairly expensive now compared to South East Asian nations. When you consider that upto 25% of a cost of the car is transportation, and then consider tariff walls that must be cleared, not to mention the rising yuan, Chinese production is unattractive.

    The car industry has evolved away from centralizing all your production in one country and shipping it around the world. There are geopolitical shifts, currency fluctuations, supply chain disruptions, and labour unrest that have forced car companies to diversify their production base. Meaning, that cars need to be built as close to the point of sale as possible. The days of building a car in Japan/Detroit/Germany and sending them around the world are long dead. This is the biggest hurdle for Chinese car exports.

    • 0 avatar
      th009

      Exactly — that’s why local production would make a lot of sense. But I have not been able to find any answers on GM’s plan for the Sail.

      Sending cars around the world can make sense for premium and luxury cars, but for models like the Sail the margins are too small to allow for that.

      • 0 avatar
        L'avventura

        India is a unique market where the domestic players are incredibly strong. Maruti-Suzuki owns near half of market, Tata & Hyundai India control 30% of the market, Mahindra & Mahindra control 10%. There is a very small market left for other brands, and all of them; Honda, Toyota, and GM build cars in domestically in India.

        Just as importantly, India has its own market needs and unique body styles. Examples being, strong small diesel demand, and those sub-4 meter sedans with disproportionately small rump.

        Indian also hold the Chinese to some level of suspicion (Let’s not forget that TODAY is the 50th Anniversary of the Sino-Indian War when China attacked India, there is land the size of Greece in territorial dispute).

        Couple all of the above with existing cheap labour and tariff and custom barriers, India isn’t the most ideal country to be importing Chinese cars into. Again, more reason to make cars locally (and to GM’s credit they are doing that, their best seller is the Indian-made Beat).

      • 0 avatar
        th009

        @L’avventura, I think your numbers are a little bit old. Looking at the May-July 2012 numbers (YTD is hard to find), Maruti Suzuki is struggling to stay at about 40% (even lower this fall due to a strike), Hyundai at 15%, Tata 10% and Mahindra at 10%.

        That leaves the others at smaller percentages but still viable: Toyota is at 7%, and VW, GM and Ford are all around 3-4% market share. With the increasing competition, Maruti Suzuki will have a challenge keeping its GM-like market share.

        MotorBeam.com has monthly sales numbers, unfortunately no YTD and changes are month-over-month, not year-over-year.

      • 0 avatar
        L'avventura

        @th009

        My numbers are from last months NYT article on this GM-SAIC tie-up, their data seems to be from the Society of Indian Automobile Manufacturers.

        http://www.nytimes.com/2012/09/06/business/global/gm-turns-to-the-chinese-to-help-sales-in-india.html?_r=0

      • 0 avatar
        th009

        Thanks for the link … I think NYT did some rounding on their numbers, or else Maruti Suzuki was much stronger in the first few months. (SIAM seems to require payment to access their statistics, and I wasn’t keen enough to pay for those.)

        In any case, it’ll be interesting to see what GM is able to do. I’m sure VW will be watching with interest as well — if it works for GM, VW will be well positioned to do the same using its experience in China. But there is also the Fiat precedent, which went from a promising start to sales of less than 1000 units per month.

      • 0 avatar

        Yes, they are doing local production of the Sail. Also India is a hub for GM’s SDE (small diesel engine).

    • 0 avatar
      ranwhenparked

      They might buy a Maxus, that was originally a British brand after all.

      • 0 avatar
        L'avventura

        SAIC also own MG. For Chinese automakers, buying foreign brands and deploying them overseas is probably their best tactic. Maxus after-all is preparing for Australia.

        But the automobile is the second-largest purchase a person makes. Branding is important. Maxus, or even the famed MG, is a brand that holds investment potential to the modern consumer. A Chinese company that is ‘made in China’ has negative associations in many countries.

        The automotive market is also incredibly competitive. There are no lack of well-respected brands in the market and no lack of cars that are well-made and affordable. Why would a consumer choose a Chinese car over their domestic brand, or over any well-known Japanese,US,Korean or German brand?

        Price? The biggest problem is that the Chinese-made car are not any cheaper than a comparable domestically made Maruti-Suzuki, Hyundai, Honda, or Toyota (as demonstrated by this Chevy Sail). And the emerging market is going to get even more cut-throat as VW & Nissan make plans to launch their $3-5K cars.

      • 0 avatar
        ranwhenparked

        @L’avventura

        It’s a sound strategy in theory, but SAIC has seriously botched the re-launch of MG in western markets. One model, no diesel, tiny dealer network, poor after sales support, and almost zero marketing. I believe they even fail at answering press inquiries to the corporate office. No surprise they struggle to sell like 200 cars a year in the UK. Maybe things will start picking up when the 6 gains a diesel option and the 3 is finally launched, but the message is pretty clear – SAIC’s main focus is building the MG brand in China and overseas sales are still very much an afterthought.

      • 0 avatar
        L'avventura

        @ranwhenparked

        SAIC, as China’s largest automaker, does have very ambitious international expansion plans. This year alone, aside from the Sail launch in India, they set up shop in Detroit, they’ve announced factory plans in Thailand, and have ambitious expansion plans in both Europe and Latin America.

        And yes, as you say, they haven’t done a great job with MG even in the UK (where it holds real brand recognition), but SAIC’s expansion shouldn’t, in my opinion, be marginalized. It’ll be an uphill battle, but they have large capital, they have motivation, and they have support of the Chinese government. All big factors.

  • avatar
    mr_muttonchops

    In the future? Definitely. In the near future? Probably not. Look at how long it took Hyundai to become a serious competitor in the developed markets. The Chinese automakers will still have a way to go to rid themselves of their image of poor quality and knock-off appearances before anyone will take them seriously, but they’re certainly making progress.

  • avatar
    dejal1

    Only when the XXXXXXX Chinese XXXXX leave Tibet alone.

    • 0 avatar

      Warning: TTAC”s commenting policy (http://www.thetruthaboutcars.com/faqs/#commentpolicy) does not allow hate speech. Please immediately edit your comment or request an edit if edits are no longer available. If this warning is ignored, a ban will follow without a new warning.

      • 0 avatar

        dejal1 has been banned for using hate speech and for ignoring a warning. As per TTAC”s commenting policy (http://www.thetruthaboutcars.com/faqs/#commentpolicy) hate speech is disallowed on TTAC.

        Note: There is freedom of opinion on TTAC. There is no freedom for a lack of manners. The redacted text shows that and how an opinion can be voiced without violating rules of TTAC and good taste.

  • avatar
    mikey

    @ Bertel…..Well done…As one that has been here for many years, I’ve witnessed many changes at TTAC. Some good,some……,not so good.

    “Hate” never has, and hopefully,never will be, tolerated here.

  • avatar
    Bimmer

    “When I saw the Sail at the Indian Auto Expo earlier this year, I was disappointed. The styling is conservative and the interiors look outdated.”
    ————————

    I would respectfully disagree with author. Judging from pictures in this review, interior does not look too dated and half-baked comparing to Toyota Etios (with centre mounted gauges and far away from the driver air vents). Sail even appears to have a passenger side airbag or at least provision for it. Can’t comment on quality of plastics in both vehicles, though. Or is Sail one class up from Etios?

    I think Spark could benefit from said diesel engine in North America.

    • 0 avatar

      Bimmer, the Spark (known as the Beat in India) already has the same diesel engine sans a cylinder. The quality of the Spark is so much better than the Sail, even though the Sail will be positioned above the Spark. The plastic quality in the Sail is bad and the layout and design of the dash is outdated. The 1-din music system is funny and doesn’t work so well. Power window switches are placed in the center console!

      • 0 avatar
        Bimmer

        Thank you for the reply, Faisal.

        How does Sail compare to Toyota Etios?

        Isn’t it possible to remove OEM head unit completely to replace it with double DIN aftermarket?

      • 0 avatar
        th009

        @Faisal, what’s the pricing of the Sail? What are its competitors in that price range (and the customer expectations)?

      • 0 avatar

        Yes Bimmer, it is possible but most owners would not want to spend that extra. There is a budget car for the mass market. The segment leader, Swift, has a very good audio system.

        The Etios is quite similar to the Sail, good space and frugal engines, but the biggest advantage the Etios has, is the Toyota badge!

  • avatar

    Is self-loathing tolerated the Disgruntled Old Coot mumbles and grumbles.

    From the numerous pics I have seen of travel within India shouldn’t the car have a “roofable” passenger number?

  • avatar
    TonyJZX

    i think it needs a bigger speedo

  • avatar
    Mr Nosy

    By Chinese car makers,do you mean badge-engineered vehicles to compete with established European and Japanese vehicles made in China,or neighboring countries? The answer is sure,why not? If you mean making a Chinese car possessing something uniquely “Chinese”,in the same way one uses terms “German engineering”,or “Japanese reliability”,then the answer depends on which Chinese brand can market what a Chinese car is,and then be able to deliver on it. Korean car makers have yet to stand for something more than “Like a Japanese car,but(currently) more adventurous in style and (also currently)a better value for the money”. Richard Gere may never buy Chinese(Or post to this site.)but if they ever build a car that can somehow manage to distill Ming vases,gunpowder,and that long,tall,old wall of theirs…

    • 0 avatar
      th009

      But in this case, it really is “Chinese engineering”. Unlike the usual Chinese JV scenario where German, Japanese or US engineering is combined with Chinese low-cost manufacturing, in this case it actually is Chinese engineering combined with Indian low-cost manufacturing.

      And I think that’s a milestone for the Chinese auto industry, even if it’s not a Chinese brand.

  • avatar
    2012JKU

    Looks like the poor mans version of our Chevrolet Spark.


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