NEW DELHI (NewsRise) -- SAIC Motor Corp. will open a car manufacturing plant in India in the next two years, becoming the first Chinese automaker to enter the country where more than a dozen companies battle it out with top selling Maruti Suzuki for a slice of the market.
Shanghai-based SAIC would build and sell its MG brand of vehicles in the world's fifth-largest automobile market through a fully-owned unit, MG Motor India, the company said in a statement on Wednesday. SAIC appointed Rajeev Chaba, the former India head of General Motors, its partner in China, as the chief of Indian operations.
SAIC is announcing its India plan barely a month after GM decided to stop selling its Chevrolet brand of vehicles in the country by December-end following nearly two decades of dismal sales. Despite its potential - India is forecast to become the world's third-largest car market by 2020 - most of the global brands have found it a tough market to crack as Maruti Suzuki dominates the scene with a range of aggressively priced compact cars.
Still, many companies are betting that rising disposable incomes and a swelling middle class would spur passenger vehicle demand in coming years. Kia Motors, part of South Korea's Hyundai Motor, announced in April that it will invest $1.1 billion to build its first plant in India.
SAIC said its India operations, which are expected to commence in 2019, will create sizeable employment opportunities. The company said it would produce and sell "environment friendly mobility solutions" under the MG brand in the country. These cars would be designed and engineered at its European and other global design centers, and adapted to Indian conditions.
MG, which originated from Morris Garages in the U.K. in 1924, was acquired by SAIC in 2008.
Some SAIC models are already on Indian roads. GM had sold a SAIC minivan and a couple of cars rebadged as Chevrolet vehicles in the country. That move followed SAIC's purchase of a 50% stake in GM's Indian unit in 2009 amid financial troubles at the Detroit auto maker. GM later bought back most of the stake with SAIC now retaining a 9.2% stake in GM India.
SAIC didn't say whether it would utilize an existing car plant of GM India or build a greenfield facility. In January, the auto maker won an approval from the Competition Commission of India to acquire "certain selected assets" of GM India's shuttered car plant at Halol in the western state of Gujarat.
P. Balendran, executive director of MG Motor India, said by phone that the company will decide in the next few months on whether to take over the Halol factory or construct a new facility.
SAIC, which also produces commercial vehicles, sold 6.49 million vehicles in 2016. Its car making joint venture with Volkswagen in China led the tally with 2 million vehicles. GM's venture with SAIC in China produces the Chevrolet, Buick and Cadillac brand of automobiles, mini-trucks and minivans.