SAIC Sails Into India

In what may be a  preview of China’s manufacturing future, or at least a slice of it, SAIC Motor and its U.S. partner, General Motors, have started local production of the first Chinese-designed car for the Indian market. The two will start selling a version of SAIC’s Sail, seen above in a company handout picture, in India next month. Sedan and hatchback versions of the small car, already a popular seller in China, are being produced at GM India’s plant in Talegaon about 100 kilometers outside Mumbai. Production of a SAIC passenger van is due to start by the end of this year. SAIC has a 50% stake in GM India.

Foreign carmakers that have got a toehold in the difficult-to-penetrate India market have done so by having  a tight small car focus and country-specific models. South Korea’s Hyundai has found success that way despite being a late arrival in the  market. So, too, has America’s Ford now it has stopped reselling European models and launched its India-only Figo. GM had tried selling Daewoo-designed models in India but without much success, in part because they were more expensive than local competitors. SAIC not only brings a design but lower-cost manufacturing expertise.

One test for this particular step in Chinese carmakers’ tenuous steps in globalization is whether what works for car buyers in one of Asia’s two big emerging markets will work in the other. Another will be whether it is successful enough for SAIC to overcome GM’s caution about extending the partnership, a necessity in China, to a worldwide relationship.