GM hopes to clinch Daewoo India deal in 3 months

By siliconindia staff writer   |   Thursday, 20 May 2004, 19:30 IST
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NEW DELHI: General Motors Corp, the world's biggest automaker, said on Wednesday it hopes to sign a deal to buy Daewoo India's car plant in the next three months that will help it boost its share in India's booming mini-car market. The US company, in India since the mid-1990s, announced in March it was beginning due diligence of Daewoo's shut plant which it planned to use to make a small car to meet competition from the local units of Suzuki and Hyundai. GM Daewoo Auto & Technology Co chief executive D Nick Reilly told reporters at a vehicle launch the deal was a complex one but he was optimistic GM would sign "definitive agreements" to buy the car assembly plant over the next few months. "I would say, certainly we are not interested in it (due diligence) carrying on for six to nine months. On the other hand, I think maybe a month is too optimistic. So it's going to be somewhere between one and three (months)," Reilly said. GM India, wholly owned by its parent, produces several variants of the German-engineered Opel Corsa and Chevrolet Optra sedans in India at its plant in Gujarat. But it barely has a presence in the mini and compact car segment, which made up over 75 per cent of the nearly 700,000 new cars sold in the past business year ended March. Reilly said GM was keenly interested in India's mini-car market, had the right products to introduce in the segment and would explore other ways to introduce them in India if the Daewoo purchase fell through. Daewoo India, in which its South Korean parent owned over 90 per cent, has a capacity to make over 85,000 cars a year and produced the popular Matiz compact car and the Cielo and Nexia sedans before it shut down nearly two years ago. It was India's third-ranked car firm by market share before its parent went bankrupt in November 2000. Reilly said GM expected to nearly double its India sales in 2004 to about 30,000 vehicles helped by the new Chevrolet Tavera multi-utility vehicle, which it introduced on Wednesday. The Tavera, powered by a 2.5 litre turbo diesel engine, will be made at GM's Gujarat plant with 85 per cent local content, that will be scaled up to 93 per cent by end-2004. GM India managing director Aditya Vij said the company expected to sell 10,000 Taveras in 2004 and 30,000 next year. Introduced in six variants with prices ranging from Rs 544,012 to Rs 844,984 ($12,030-18,686), the Tavera will mainly compete with the Scorpio from market leader Mahindra & Mahindra Ltd, Toyota's Qualis and the Sumo and Safari from Tata Motors Ltd. GM officials estimated India's multi-utility vehicle sales would be 94,000 units in 2004 and rise by over 20 per cent a year until 2008.

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