The Telegraph
Since 1st March, 1999
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GM global allies eye local links

New Delhi, Nov. 27: General Motors is getting ready to stake out the turf in India.

GM, which already has a presence in the country with the Opel Astra and Corsa models, is in talks with Fiat India and Suzuki — both subsidiaries of its global allies Fiat of Italy and Suzuki Motor Corporation of Japan. The talks with Fiat and Suzuki are expected to create production synergies that will help all three auto-makers tamp down costs at local operations. GM has a 20 per cent stake in both Fiat SPA and Suzuki of Japan, with representatives on their respective boards.

Talks with Fiat India have focused on joint purchase of raw materials, common supply chain development for products, vendor development and sharing the power-train technology.

GM is still working on the synergies that it can achieve with Suzuki Motor of Japan, which has a controlling stake in India’s largest carmaker Maruti Udyog. GM hopes to suss out these opportunities when the entire disinvestment process in Maruti Udyog is completed.

Next March, the government is supposed to come out with an initial public offering of 36 lakh shares which Suzuki Motor has underwritten at Rs 2,300 per share. The offer will be made through the book-building route: if the investors offer more than Rs 2,300 per share, then Suzuki’s stake will be restricted to 54.2 per cent. If they don’t, then Suzuki Motor will corner a 74.2 per cent stake at Rs 828 crore.

“GM has a 20 per cent stake in both Fiat and Suzuki. So, in India also, we are looking at synergies. With Fiat, we have already held talks on common supply of parts, vendor development and technology sharing. Most of these arrangements are being made to enhance the economies of scale of operations. In a competitive auto market, this is necessary,” General Motors India sources said.

“However, plans with Suzuki are yet to be made. We will look forward to possible synergies. But until the full disinvestment is over, there will be no GM-Suzuki deal,” he added.

GM is aiming to capture the volume market in India by not only bringing down manufacturing costs but also launching a suitable car for Indian market. At present, a market study is being conducted to find the right products for Indian roads.

GM will be leveraging the opportunities afforded by its joint venture with the profitable rump of Daewoo Motors of South Korea. “The GM-Daewoo deal will be finalised very soon. The understanding with GM India is that we can bring in any car from GM-Daewoo portfolio. So a lot of options will be available for GM India and we are aiming to be a volume player within a couple of years,” sources said.

And though the Opel Astra and Corsa have not been able to wow Indian buyers, GM is planning to launch a new sedan—the Vectra 2003—in both petrol and diesel versions next month. This will be imported as a completely built unit (CBU) and pitted against the Ford Mondeo, Hyundai Sonata, Honda Accord and Toyota Camry.

“Although there are a number of cars are present in that segment, the Vectra will mainly compete against the Mondeo and will be priced competitively for the market,” he said. Ford Mondeo is priced in the range of Rs 16.76 lakh to Rs 17.86 lakh.

The Panther—GM’s sports utility vehicle—will be launched next fiscal when Hindustan Motors starts producing the engine and transmission for the car.

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