GM To Van-Dalize India

Bertel Schmitt
by Bertel Schmitt
gm to van dalize india

Gasgoo has not surprising news. GM China announced that by the end of next year, they will invest India with mostly small trucks and possibly passenger cars, taken from their GM’s and SAIC’s Chinese portfolio. So far, so boring.

India’s Economic Times has a more alarming slant to the story: “General Motors may use its Chinese associations to launch a rival for Tata Nano in India.” Most likely, all are missing the real story.

The biggest winner of this is little Wuling.

In December last year, GM handed their Chinese partner SAIC the keys to the Indian market, from which SAIC had been effectively locked out. GM and SAIC formed a 50:50 Hong Kong based investment company that owns the Indian operations. GM contributed their Indian presence, SAIC contributed $350m in cash that was in sort supply at the times. For that pittance, GM sold off half of their future in the world’s next big auto market.

And the cars from GM’s and SAIC’s portfolio? Fluff. Economic Times says that “the first products from General Motors’ three-way joint venture in China with Wuling and SAIC will be introduced in India end 2011 when it will roll out two minivans — Wuling Rongguang and Sunshine.”

No Nano-killer from GM. Wuling will flood India with utterly boring, but immensely successful (in China) little Wuling delivery vans. GM holds a 34 percent stake in the joint venture, but counts 100 percent of the sales as theirs. Wuling vans make up for more than a million of GM’s Chinese success.

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  • Robert.Walter Robert.Walter on May 31, 2010

    Unless it is governed by an unimaginable contract right, the days of GM taking credit for other people's sales will one day end. This will most likey occur when Wuling or SAIC start claiming the volumes as their own (perhaps leaving GM it's equity-pro-ratia share), or when SAIC decided to buy GM ...

  • Bertel Schmitt Bertel Schmitt on May 31, 2010

    I have heard to exactly such a contract exists. The Chinese could care less if GM claims 100% of the cars of a JV in which they only have 34%. The Chinese probably won major concessions for that. SAIC reports their numbers. Wuling reports theirs.

  • Infinitime Infinitime on May 31, 2010

    Smart move on the part of SAIC to try and gain entry into the (potentially very lucrative) Indian market, under GM's banner. The average Indian consumer seems to be somewhat reluctant when it comes to buying Chinese goods. Perhaps sour grapes from the border wars of the late 1960s, but India is pre-occupied with comparing itself with China at every turn, despite economic realities. This is despite the fact that China and India held similar GDP numbers in 1978, but China's GDP is now three times that of India's.... Well, at least India can claim to be a "democracy" unlike those authoritarian Commies in commentators are often quick to point out...:) In any event, SAIC's products would do MUCH better under GM's banner, than if it was marketed as a Chinese import. Interestingly, the WuLing vans main target is the newly-affluent rural farmer in China, a group that is not too different from the newly-affluent rural farmer in India. The last time I was in China, I took a close look at the Wuling... interesting product. Basically very derivative of the Japanese micro-vans, but with considerably more heavy-duty suspension bits, to accomodate for less-than-ideal backroad conditions connecting many villages to the main roads. The Chinese highway network has made leaps and bounds in the last 5 years, but many of the smaller roads connecting villages to the main network are still third-world quality. The WuLing was not very good on the highway, but was well-suited for these local roads.

  • Conslaw Conslaw on Jun 01, 2010

    50% of nothing is ? GM may have sold half of their Indian opperations for a pittance, but if GM didn't have the funds to develop the Indian operation, what choice did it have?