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GM-Shanghai Auto venture to launch LCV in 2011
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General Motors (GM) India said on Friday that the first vehicle produced in collaboration with Chinese automaker Shanghai Automotive Industry Corporation (SAIC) would be a one-tonne light commercial vehicle (LCV).

After months of speculation on the tie-up, the company has formally announced the agreement. However, the finalisation is expected shortly.

According to Mr Karl Slym, President and Managing Director, GM India, this is the first product under the new venture and is expected to be in the market in 2011. Under the collaboration, the company plans to develop and manufacture a variety of vehicles in India for both the domestic market and exports.

“SAIC has a full portfolio of products which we will look to introduce to the Indian market. In the beginning, it will be commercial vehicles, but later there will be many more products,” he said. Mr P. Balendran, Vice-President (Corporate Affairs), GM India, said the company would also explore many other options, such as manufacturing cars, under this new venture.

Investment

Responding to a question on the investment planned by the company in the new venture, Mr Balendran said both the partners had committed an initial investment of $100 million in March this year, shared equally by both. This fund, however, was for collaboration across the whole Asian market.

“There will be further investments under the new venture in India, the details of which will be worked out in the next three months,” he said. The joint venture would be headquartered in Hong Kong. It will handle individual collaborations in different countries. The GM-SAIC tie-up is looking to introduce the vehicles in at least eight emerging markets.

Combining forces

Speaking on the benefits of the tie-up, Mr Slym said, “By combining the outstanding resources of GM in India with those of our partners in China, Korea and across the globe, we can respond faster to the evolving domestic market than ever before and also have the products to support our export desires. This will also give us an opportunity to utilise and expand our manufacturing capacities as we introduce additional products.”

The joint venture would also look at introducing other SAIC products including sports utility vehicles and cars at a later date. The brand name for the LCVs is being discussed; indications are that it could be under the GMC or Chevy brands.

GM India plans to use its existing factories at Halol and Talegaon for the production of the commercial vehicles. This would have financial implications for both companies as it would involve asset transfer, according to reliable sources. GM India makes the Tavera, a multi-purpose vehicle, at the Halol plant, making it ideally suited to produce the LCVs. The engines for the LCVs could come from GM India's powertrain plant which has a capacity of 3.6 lakh units a year.

“As far as component supply is concerned, we will look to source most parts from within India, although no bids have been finalised yet,” Mr Slym said.

GM recently tied up with electric vehicle manufacturer Reva. The first car under this tie-up would be the electric Spark, which is expected to be out by the second half of next year.

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