GM-SAIC Bringing Three Chinese Cars to India

MUMBAI – General Motors India will be expanding its portfolio of vehicles, designed and engineered by GM China and its Chinese joint-venture partner SAIC, in a bid to reverse slow sales, grow market share and stabilize its product mix.

The 3-way partnership formed in late 2010 is phasing out underperforming cars in India and replacing them with facelifted products launched in recent months and, perhaps more importantly, three Chevrolet models to be built at two Indian plants.

GM India has a lot of catching up to do. Its sales of 63,169 light vehicles during the year’s first eight months were 15.6% worse than like-2011, according to WardsAuto data. After peaking in 2010 with a 4% market penetration, the auto maker’s share dropped to 3.3% last year and 2.9% in year-to-date 2012.

The lackluster numbers belie GM India’s lineup of seven well-built, attractive, comfortable and fuel-efficient models competing in each major market segment. It has access to small but efficient engines developed jointly with Fiat and a reputation for excellent customer care.

However, the auto maker is running two Indian plants in which it has invested more than RR54.3 billion ($1 billion) at less than 25% capacity.

Vice President P. Balendran blames increases in interest rates, taxes and the cost of fuel for GM India’s sinking sales and market share. Yet established rivals such as Toyota Kirloskar and Ford India, as well as newcomers including Nissan and Renault, are performing well under the same circumstances.

Balendran predicts improvement thanks to the models co-developed by GM China and SAIC: the Sail U-VA hatchback, notchback sedan and Enjoy multipurpose vehicle. “We are expecting an incremental growth of 5% to 10% during the remaining months of the year, the same growth rate that is projected for the industry,” he says.

The Sail U-VA qualifies for the lowest tax bracket thanks to its 1.2L gasoline engine that achieves 35.3-44.6 mpg (6.7-5.3L/100 km) city/highway, and 1.3L diesel producing 40.0-51.7 mpg (5.9-4.5L/100 km) city-highway.

“The Sail U-VA and the Sail sedan will be pitched against (the) Ford Figo hatch and Maruti (Suzuki) Swift Dzire sedan,” Balendran says. Pricing has not been announced, but both Sail models likely will be priced to compete with those entry-level cars.

The 7-seat Enjoy MPV is a more powerful, roomy and efficient refresh of SAIC’s popular Hong Guang. It is expected to contend with Toyota Kirloskar’s highly successful Innova for customers, but success depends on whether its price will be competitive.

GM India and Fiat jointly developed the Enjoy’s 1.4L gasoline engine producing 29.4 mpg (8.0L/100 km) and its 1.3L 4-cyl. multijet diesel boasting 47 mpg (5.0L/100 km). The MPV’s suspension has been tuned for India’s wide-ranging road and traffic conditions.

GM India also may regain customers with facelifted versions of four existing models launched in recent months: the Tavera Neo 3 multi-utility vehicle, Captiva diesel cross/utility vehicle, Cruze sedan and re-engineered Beat small hatchback.

Unconfirmed reports say a small CUV based on the Chevrolet Trax, currently to be displayed at the Paris auto show later this month and bound for 140 countries, may launch in India later in 2013 in the small-car tax bracket.

“Unless you create excitement in the market, you would not survive there,” Balendran says at the updated Cruise’s debut. “We launch these new models and vehicles with a long-term perspective.”

That excitement has faltered amid a history of shifting strategies. Over its 16 years in the country, GM has seen three transformations in its product portfolio, starting with GM Europe’s Opel brand in 1996. Korea-built Daewoo vehicles branded as Chevrolets succeeded Opel in 2003, but they fell short of Chevrolet’s quality and performance standards.

The Chevrolet brand returned in 2007 with the Spark, based on a Daewoo model re-engineered by GM Daewoo, which since has been renamed GM Korea. Sales of the Spark minicar drove GM India’s growth 7% over two years, but 2009 sales were flat.

The Beat in 2010 boosted deliveries 62.6%, but 2011 again showed virtually no change, WardsAuto data shows. There was a decline of 12.9%  in sales during the first seven months of 2012.

The underperforming Spark, Aveo U-VA hatchback, Aveo entry-level sedan and Optra Magnum large sedan will be phased out as their new or revamped replacements arrive.