Munich: SAIC Motor Corp is exploring various options to form a partnership with an Indian company in order to expand its presence in the thriving automobile market, according to Chen Hong, chairman of China’s largest automaker.
The company declined to comment on the possibility of an alliance with JSW Group. However, according to ET’s June 14 edition, a privately-owned company led by Sajjan Jindal, chairman of JSW Group, aims to acquire up to 48% stake in MG Motor India.
Talks between SAIC, the parent company of MG Motor India Pvt Ltd, and potential Indian investors are expected to conclude within a few months, according to another senior executive. The executive stated, “We are currently in negotiations with several potential partners and aim to finalize the talks as soon as possible, possibly within two months.” However, it was not disclosed whether the company was close to reaching a deal with JSW Group. “India is an incredibly important and unique market for SAIC. We require the right partner who can help us understand the Indian market,” elaborated the executive when addressing the reasons for the delay in finalizing the talks.
SAIC’s search for local partners in India comes amid increased scrutiny by the Indian government towards Chinese companies due to ongoing geopolitical tensions between New Delhi and Beijing following a deadly border clash in June 2020. As a result, India has imposed restrictions on foreign direct investments from China, making it more challenging for Chinese firms to invest in India. “We are considering various possibilities,” stated Hong at Europe’s largest mobility show in Munich. “Our top priority is to benefit the Indian consumers,” he added when questioned about SAIC’s manufacturing presence in India. SAIC operates in India through the British-origin brand MG, which offers five models including the Astor and Hector sport-utility vehicles, as well as the ZS electric SUV. The company has been in discussions with investors, including JSW Group, regarding a majority stake sale to raise funds for its Indian operations. JSW Group, primarily known for steel and cement, is keen to diversify into India’s nascent EV market.
With SAIC’s foreign direct investment proposal facing obstacles amidst heightened scrutiny on Chinese investments in India, MG Motor has relied on external commercial borrowings from its parent company to sustain its operations. SAIC is eager to expand MG Motor’s operations in India, as stated by the aforementioned executive. “We need to enhance production capacity and introduce models that are better suited for the Indian market, while staying aligned with our customer-oriented philosophy,” remarked the executive. SAIC boasts over four decades of experience in the automobile industry with advanced technologies and a wide range of products catered to the Indian market.
MG Motor, which entered the Indian market in 2019, aims to increase sales to 80,000-100,000 units this year, compared to 48,000 units in 2022. The company plans to finalize new investors-owners who will collectively own over 50% of the company by FY24, as announced by Rajeev Chaba, CEO emeritus of MG Motor India, in May.
The journalist is in Munich to attend the IAA Mobility 2023 on the invitation of Skoda Auto Volkswagen India
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