Exit plan: GM may transfer Talegaon plant to SAIC

GM is paving the way for SAIC's India foray and the transfer of its facilities, including the one at Talegaon (pictured), is possibly a part of GM and SAIC's plan for emerging markets. Photo: Reuters

In an apparent move to exit India, American carmaker General Motors (GM) is learnt to be in talks to sell its Talegaon facility near Pune in Maharashtra. Multiple sources have said that talks are on with potential buyers for a sale or transfer and a deal might be struck by the end of this year. 

In May, GM had announced it would exit India by the end of December and had consolidated its Indian manufacturing at its Talegaon assembly. All operations at its Halol plant in Gujarat were stopped on April 28.

According to sources, for its Talegaon plant, the company might settle for a deal in which the acquirer would continue to contract manufacture vehicles for GM as India is a low-cost manufacturing base.

Earlier in May, GM India president and managing director Kaher Kazem had declined to comment about any future sell-out or collaboration plans for Talegaon. He, however, had indicated that "there might be a collaboration in future”. He had then said they wouldn’t be able to “talk on what kind of collaboration that could be”.

A GM India spokesperson denied that there were any plans of selling the asset. 

Chinese automobile giant Shanghai Automotive Industry Corporation (SAIC) is taking over the Halol asset. MG Motor India, SAIC’s wholly-owned subsidiary, has inked a deal with the Gujarat government to invest Rs 2,000 crore to refurbish the facility, built in 1996, to produce the Morris Garages brand of cars. It said it would also bring in five global vendors here. 

The acquisition of the Halol plant assets by SAIC, which is joint venture partner of GM in China and also holds a stake in GM India, is unlikely to be a cash deal. SAIC holds a 9.2 per cent stake in SAIC General Motors Investments and has international collaborations with GM. Earlier, sources had said that some arrangement was being worked out internally between SAIC and GM on the acquisition of the assets. They had said that the arrangement could range from stake dilution, transfer of assets and other collaborations.

A Competition Commission of India notice in January had noted that General Motors Hong Kong (GMHK) was looking at acquiring 9.2 per cent shares of SAIC General Motors Investment (a joint venture that GM had formed with SAIC in 2009 for emerging markets) from SAIC Motor HK Investment.

As part of this, SAIC Motor HK would exit the joint venture and also its subsidiaries, GM India (GMI) and Chevrolet Sales India (CSIPL). GMI and CSIPL are subsidiaries of SAIC General Motors Investment Ltd, the joint venture.

A source indicated that “this stake sale is likely to include the transfer of Talegaon assets as well”. GM is paving the way for SAIC's India foray and this is possibly a part of a global arrangement for GM and SAIC's plan for emerging markets.

It is also learnt that several employees of GM India have joined MG Motor India.

When asked about SAIC's interest in GM's Talegaon asset, P Balendran, executive director, MG Motor India, said, "Since we are not aware of any such development, we would not like to comment on it.” The Talegaon plant has an installed capacity of 160,000 units per annum and currently makes the hatchback Chevrolet Beat for export markets, especially Mexico and other Latin American markets.