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GM Raises Stake in Indian JV

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General Motors Company (GM) raised its stake in its Indian joint venture (:JV) with Shanghai Automotive Industry Corporation (:SAIC) from 50% to 93%. The automaker purchased the additional 43% from SAIC at an undisclosed amount.

The JV, well known as General Motors India, started as an equal joint venture between SAIC and GM in late 2009. Under the JV, GM announced plans to launch several vehicles using the SAIC platforms, including three light commercial vehicles (LCVs), in order to strengthen its foothold in the fast-growing Indian car market.

GM India also plans to export vehicles to other markets, including South America and South East Asia. It is expected to launch hatchback Sail next month and the sedan version of the car along with multi-purpose vehicle Enjoy later this year.

GM already succeeded in China with its Shanghai GM JV with SAIC. Currently, Shanghai GM is the biggest automaker in the country in terms of sales.

Recently, Ford Motor Co. (F) announced plans to boost exports of its engine production from India by shipping them for the first time to Europe. Currently, the automaker exports 40% of its Indian-made engines and 25% of its Indian-made cars to 35 countries.

Ford’s plan to rev up Indian exports is in line with its capacity expansion programs in the country. The company expects to manufacture 450,000 cars and 600,000 engines in India by 2015.

The company has already pumped in $2 billion to build manufacturing facilities in India. However, it is still lagging behind Hyundai Motor Co. (HYMLF) and Maruti Suzuki India Ltd, which occupy the lion’s share in the Indian car market.

Although the expansion of foreign automakers in India is aimed at tapping the growth potential in the market, overall prospect of the Indian automotive market doesn’t look promising given the macroeconomic scenario of the country, high petrol and commodity prices and unfavorable interest rates. In September, car sales in the country dipped 5.4% to 1,57,536 units.

According to the Society of Indian Automobile Manufacturers (:SIAM), India will miss its target of achieving an annual turnover of $145 billion by 2016 under the Automotive Mission Plan (AMP). It has also lowered car sales growth projection to 1%-3% for the year from the earlier guidance of 9%-11%.

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