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GM Sells 50% Stake in GM India to SAIC for $500M

Business Standard. General Motors, which early in December announced a 50:50 joint venture with China’s Shanghai Automotive Industry Corporation Group (SAIC) deepening their cooperation to address expanding markets in Asia (earlier post), has sold 50% of GM India operations to SAIC for US$500 million—about half of what GM has already invested in India since beginning operations in 1994.

GM will retain 100% ownership of the R&D center in India.

SAIC and GM-US formed a 50:50 joint venture investment company called General Motors SAIC Investment Ltd (GMSIL), which will be based in Hong Kong. The new company, with an equity base of $100 million (Rs 470 crore) will utilise GM’s Talegaon (in Maharashtra) and Halol (in Gujarat) plants to first manufacture cars and utility vehicles for the domestic market. The new GMSIL has announced an investment of $650 million (Rs 3,055 crore) for the first operational phase in India.

As part of this $650 million expansion, GM and SAIC will launch small cars and utility vehicles in the domestic market from the second half of 2011. These will be also exported to other parts of Asia. GM’s domestic market share is less than four per cent. GM India’s production capacity, currently 60,000 units a year, will be increased to 250,000 units by 2012.

All cars, even those contributed by SAIC, will be branded as Chevrolet, and utility vehicles contributed by SAIC by another name. GM SAIC will first launch an 800cc car and an entry-level, mid-size sedan from Wuling.

In October, General Motors India registered a record growth of 15% in sales, compared to the corresponding period last year. It sold 7,413 units in October against 6,465 units sold in October 2009. The October 2009 sales comprise 4,231 units of the Chevrolet Spark; 1,161 units of the Chevrolet Tavera; 599 units of Aveo U-Va; 337 Units of Aveo; 163 units of Chevrolet Optra; 110 units of the Chevrolet Captiva; and 812 units of Chevrolet Cruze.

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