NEW DELHI, July 26 (Reuters) - General Motors Corp, the world's largest automaker, will outsource engines and transmissions from India's Hindustan Motors for a new vehicle it will launch locally, the two said in a joint statement on Friday.
Hindustan Motors Ltd , one of India's oldest auto companies, makes the Ambassador car, the Lancer sedan in collaboration with Japan's Mitsubishi Motors Corp and the Trekker and RTV utility vehicles.
General Motors manufactures the German-engineered Opel Astra, Corsa and Swing models at a plant in India's western state of Gujarat. But its Indian facility does not make engines.
"Hindustan Motors (HM) and GM India are in the process of signing an agreement for supply of engines and transmissions for GMI's proposed new vehicle (to be launched in India)," the two companies said in the statement.
Under the proposed agreement, expected to be signed in the next few days, Hindustan Motors will manufacture engines and transmissions at its plant in Pithampur in the central Madhya Pradesh state. GM India will provide the necessary technical support for the venture.
In January, Hindustan Motors announced a similar deal to make engines for Ford's Ikon sedan in India at the Pithampur plant. The plant already makes engines and gear boxes for the Ambassador, Mitsubishi's Lancer car and the RTV utility vehicle.
"From being a pure automobile manufacturer, we are now consolidating our position as an aggregate provider for others," Chandra Kant Birla, HM's chairman said.
GM did not disclose the name of the new vehicle but Indian newspapers have speculated it will be the Panther utility vehicle from its 49 percent owned partner, Isuzu Motors Ltd .
"Localisation is key to reduce the cost of ownership. With this tie-up, we will be able to price our product competitively," Aditya Vij, CEO of GM India, said in the statement.
All three of GM's cars in India are positioned in the mid-size segment, the Astra in the upper end and the Corsa and Swing models in the lower-end of the same segment.
GM's absence from the high volume low-price segment of hatchback cars has restricted its market share in India to less than two percent of the nearly 600,000-a-year new car market. ($1 = 48.677 Indian rupees)