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Great Wall Motors may pull out of India if GM plant not handed over by mid-2022

The Chinese company is also awaiting government approval for its investment proposal. Its employee strength in India, meanwhile, is dwindling.

May 30, 2022 / 02:00 PM IST

Great Wall Motors Company (GWM), China’s largest sports utility vehicle maker, may make a quiet exit from India if the planned purchase of an automobile plant isn’t concluded by mid-2022, people familiar with the matter said.

GWM, which unveiled a suite of its vehicles at the Auto Expo 2020, may take a decision on its India plans after the term sheet to acquire a General Motors plant in the country expires at the end of June, after two extensions.

General Motors exited India in 2017. However, the sale of the US auto company’s factory to the Chinese auto giant remains in limbo after a deal signed in January 2020.

GWM had committed to invest about $1 billion in India in a phased manner and later decided to go acquire GM India’s facility in Talegaon, Maharashtra. However, India’s government is yet to approve the Chinese automaker’s investment proposal.

GM, Ford, Fiat and Harley-Davidson are among auto companies that have left India since 2017 after making losses or failing to gain market share. In GWM’s case, however, it is waiting for the green signal from India’s government, which has to scrutinize and approve investments from countries that share a border with India.

Falling headcount

Additionally, GWM’s staff strength in India has been dropping.

“Two years ago, GWM was on a hiring spree and had 75 people, including 20 Indians, on its management’s payroll. But that headcount has now dwindled to 30 people, including 10 Indians,” people aware of the development said.

Last year, Hardeep Singh Brar, who was director for sales and marketing at GWM, quit to join Kia Motors India. A year later, Kaushik Ganguly, director of strategy & planning who was GWM’s first senior employee in India and instrumental for its business plan and investments, resigned.

Due to regulatory hurdles, the company’s former country head James Yang was transferred to head its Brazilian operations.

“Now all eyes are on the Central government’s green signal,” one person said. “In all probability, the (GM plant) deal may not be inked and then the company will steadily wrap up its operations.”

An emailed query sent to the GWM global spokesperson remained unanswered at the time of publishing.

“We have no update to share at this time,” GM International’s director of communications, George Svigos, told Moneycontrol.

GWM, which had studied the Indian market since 2016, had decided to enter the premium SUV segment in India with its ‘Haval’ models. It was also evaluating bringing in a zero-emission vehicle under the ‘Ora’ brand.

“GWM’s participation in the Auto Expo had created lot of buzz and interest. However, subsequent developments have meant that plans have not fructified,” said Ravi Bhatia, president of JATO Dynamics India. “The extension of the MoU is an activity between two manufacturers and they can decide to extend it. However, the key factor is government approval.”

If GWM gets the go-ahead, it would be the second Chinese vehicle manufacturer, after SAIC Motor Corp.-owned MG Motor, to enter India.

“GWM has a product portfolio very well-suited to the Indian market,” said Avik Chattopadhyay, founder of Expereal, a brand consultancy firm. “Given its strategic decision to launch with the Haval badge, it could have been as successful, if not more, than the MG badge. Also, it has a very interesting EV portfolio, which could also be brought in. However, the current market sentiment, coupled with geopolitics, does not bode too well for the company. One can obviously not wait for ever as keeping an operation alive does need investments.”

The government tightened foreign direct investment rules in April 2020 following the outbreak of Covid-19 to prevent opportunistic takeovers of Indian companies by investors from countries that share a border with India.

Avishek Banerjee