SAIC looks to be the first Chinese automaker to drive into India, hires KPMG for market study

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NEW DELHI: SAIC Motor could soon become the first Chinese company to sell its cars in India as it has started hiring key executives, people close to the development said.

MG Motor India, the local unit of China’s largest automobile company, will sell vehicles with an MG tag, a British brand that SAIC acquired from Chinese firm Nanjing Automobile about a decade ago, several people close to the development said. The firm has been registered in India.

Rajeev Chhaba, a former India head of General Motors, will be new the CEO and at least seven more people have been hired to lead the finance, human resources, purchase, IT and other functions.

SAIC has the Competition Commission of India’s approval to acquire General Motors’ factory at Halol in Gujarat.

But the final deal is conditional upon GM — SAIC’s partner in China — settling labour issues at the plant. If that happens by the middle of next month, the Chinese company is ready to take over the plant as early as in April and roll out its first vehicle from the plant late next year or early 2019, said one of the people spoke to. If that doesn’t happen, it plans to build a new facility.

While Chinese companies sell everything from toys to telecom equipment in India, automakers have not been successful in the country. One reason could be the lingering apprehension about quality, say industry experts.

The companies are cautious, too, as global automakers such as Volkswagen, Fiat, Ford Motor and GM have struggled in India despite being present for more than a decade. But if they can convince consumers about quality, Chinese automakers, with their frugal technologies, can reap big success in the costconscious Indian market and pose big challenge to leaders Maruti Suzuki and Hyundai Motor, say the experts.

Another GM India veteran, P Balendran, will also be joining as a top executive. Both Chhaba and Balendran are currently working as advisers and the formal appointment will happen later. The two are on the MG Motor India board where the remaining six members are Chinese nationals.

On the website of the Ministry of Corporate Affairs, Balendran’s name is given as the representative of MG Motor India. He didn’t comment on the company’s plans. Chhaba didn’t respond to calls made on his mobile phone.

SAIC has hired KPMG to conduct the market study, while PwC has done study on the cost of the GM plant. It has also roped in EY to help it finalise suppliers. The immediate hurdle to start operations is the labour issues at the GM plant.