Will GWM’s backdoor entry affect its competitive edge in India?

The company is believed to be tweaking its India strategy to suit its immediate needs of globalization and tapping one of the fastest growing SUV market globally.

May 06, 2021 SHWETA BHANOT MEHROTRA No Comments Like

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Chinese SUV maker, Great Wall Motors (GWM)’s decision to enter the India market via the CKD/CBU route is expected to discount its competitiveness in the Indian market.  According to experts, the GWM Group, unlike other automakers produces around 50% of its parts in-house, and it is this advantage that gives it the edge over competition worldwide in terms of product value, quality and technology offering. 

The company has been looking to extend this competitive offering in India through its proposed production at the Talegaon plant in Maharashtra. In early 2020, GWM announced its India entry along with an agreement with General Motors to acquire its plant in Talegaon. It planned to invest $1 billion in India and signed an MoU with Maharashtra government. However, the MoU was put on hold due to border tensions between India and China. An insider at Maharashtra Industrial Development Corporation (MIDC) said, “There was no further information on the MoU.” An e-mail to GWM Group also went unanswered. 

While the company still awaits regulatory approvals, they now look far-fetched, given the COVID-19 situation in India. The company is believed to be tweaking its India strategy to suit its immediate needs of globalization and tapping one of the fastest growing SUV market globally, after its home market, China.

Despite the Covid situation, the compact and mid-sized SUV segment has performed well in India. “The SUV segment market share in overall sales increased to 29% in 2020 compared to 26% in the previous year. GWM is definitely targeting the right segment,” says Bakar Sadik Agwan, Senior Automotive Analyst, GlobalData.

Under its globalization strategy, GWM, is expanding its reach outside China. India continues to remain an important market. “They have been planning to make India a mother hub for the brand in the right-hand driven markets,” says Puneet Gupta, Director, Automotive Forecasting India, IHS Markit.  

In 2016, GWM India R&D center (Great Wall India Research and Development Private Limited) was established in Bengaluru with a team of over 120 experts to focus on research involving Autonomous Driving System, Hybrid Control Unit, Vehicle Control Unit and Battery Management System.  

GWM’s Annual Report for 2020, also mentions how its “proposed acquisition of a vehicle plant in India was also making smooth progress.” Moreover, the company also has entities by the name – India Haval Automobile Private Co. Ltd, dealing with import and export, sales, leasing and maintenance of automobiles, automotive parts and related products, and India Haval Automotive Pte Ltd. which is into auto selling already registered. In January 2020, the company injected capital of around USD1.5 million to India Haval as per its Annual Report 2020. 

“Local production would have given them an edge over their rivals as GWM unlike other carmakers produces around 50% of its car requirements in-house,” points Gupta. “GWM would have given brands such as Kia, Hyundai and Maruti Suzuki India a tough competition. But now we need to see how they maneuver around the infrastructure requirements, specifically convincing dealers to set up shop for just a single product, for now,” he says.

Some future competitors of GWM expected the Haval H6 to have performed well in the market. “Hyundai’s new Creta was a hotcake in 2020 and models such as Kia Seltos & MG Hector witnessed 113% & 63% growth in sales, respectively. SAIC’s MG ZS EV also managed to sell 1,300 units in the first year,” adds Agwan.  Haval has been one of its brands that the Group has been extensively pitching outside of China. The brand is amongst the top three global SUV brands in the world. 

Further Agwan adds that success of models such as Nissan Magnite and Kia Sonet indicates the dynamism of the Indian market and customers’ strong appetite for compact SUVs. “It’s all about the right product at the right time. GMW could be potentially eyeing a similar growth path for its SUVs & EVs.”

Currently, CKD imports attract 15% to 30% import duty and goes up to nearly 40% for CBU electric imports. To remain competitive in the market, GWM, will have to look at local assembly for competitively-priced products. The company might also look at sub-contracting, in order to sustain itself in a highly competitive Indian SUV market. It has been reported last year that other Chinese players such as Changan Automobile Co. Ltd and FAW Group Corp, were considering getting into a contract manufacturing pact to reduce their overall investments. 


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