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Great Wall strikes deal to buy General Motors' plant in India

Updated: 2020-01-20 11:14
A VV6 model from Great Wall Motors is shown at the CES Asia show in Shanghai. [Photo by Li Fusheng/China Daily]

NEW DELHI-Great Wall Motors has agreed to buy General Motors' car plant in India, the companies said on Friday. The move comes as the Chinese automaker expands overseas amid slowing domestic demand.

The deal, which is expected to be completed by the second half of 2020, will jumpstart Great Wall's plans to build and sell cars in India and bring to an end GM's manufacturing operations in the country.

People aware of the deal told Reuters earlier on Friday that the two companies had agreed on the sale, with one of the sources adding that Great Wall is likely to pay around $250 million to $300 million to acquire the plant.

"The Indian market has great potential, rapid economic growth and a good investment environment," said Liu Xiangshang, vice-president of global strategy at the Chinese automaker.

"Entering the Indian market is an important step for Great Wall Motors' global strategy."

Great Wall, one of the biggest sellers of sports-utility vehicles in China, plans to enter India with its Haval and electric vehicle brands. The automaker will announce more detailed plans at the Delhi auto show in February, Liu said in a statement.

Chinese automakers are accelerating plans to build cars in India to combat slowing sales at home. Great Wall has been encouraged by the initial success of rival SAIC Motor in the country, sources told Reuters.

Although car sales in India are also slowing, the market is expected to become the world's third-biggest by 2026, behind China and the United States, according to consultancy LMC Automotive.

However, Fiat Chrysler, Ford Motor and GM are scaling back in India after battling in one of the world's most competitive markets, which is dominated by smaller, low-cost cars made by Maruti Suzuki and Hyundai Motor.

GM, which stopped selling cars in India at the end of 2017, has already sold its other plant to SAIC, where the Chinese automaker builds cars under its British brand, MG Motor.

Although the American automaker continued to build small cars for export at its plant in Talegaon in Maharashtra state, it has been exploring strategic options for the site, said Julian Blissett, senior vice-president of GM's International Operations.

"Our decision to cease production at Talegaon is based on GM's global strategy and optimization of our manufacturing footprint around the world," Blissett said in a statement. He added the company will support employees affected by the decision.

Great Wall is expected to upgrade and modify GM's plant to suit its needs and set up a base for its suppliers, according to one of the sources. The automaker expects to begin production within a year.

The plant is expected to have an annual production capacity of about 150,000-160,000 vehicles, the source said.

Reuters

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