Chinese vehicle manufacturer Great Wall Motors has reached an agreement with US carmaker General Motors involving the purchase of the latter's manufacturing plant in India. The purchase of the manufacturing plant is part of the Chinese company's strategy to expand into overseas markets to compensate for its lackluster sales at home.
The two companies revealed the deal in a joint statement on Friday, announcing that the deal should be completed by the second half of this year. The purchase of the plant is meant to be the jumping-off point for Great Wall's big entrance into the Indian car market, while at the same time marking the end of GM's operations in the country.
Both companies did not disclose the exact amount involved in the deal, but sources close to the negotiations have stated that Great Wall is likely to pay between $250 million and $300 million for the manufacturing facility. The substantial investment could be well worth it given the success of other Chinese companies that had previously entered the market.
The Chinese carmaker's vice president of global strategy, Liu Xiangshang, mentioned in a statement that Great Wall has seen great potential in the Indian Market and it considers the country as a good investment environment. Liu added that the purchase of the factory and the company's entry into the Indian market is an important step in its much wider global strategy.
Liu revealed that the company would be announcing further details regarding its plans in India during the upcoming Delhi Auto Show event in February. Industry experts have revealed that Great Wall is likely to immediately start work on its newly acquired facility, upgrading the modifying the plant to suit its manufacturing needs. The company is also expected to begin production at the facility within this year.
Great Wall is reportedly planning to locally manufacture its popular models for the Indian market. This will include its Haval-branded vehicles and likely a number of its electric vehicle brands. The company's bold strategy was likely inspired by the initial success of its rival SAIC Motor, which entered the market under its British brand, MG Motor. SAIC Motor also purchased one of GM's manufacturing facilities last year.
GM officially announced its exit from the Indian market in 2017. Despite having poured a substantial amount of money into its operations in India, the US carmaker simply could not go toe-to-toe with competitors such as Maruti Suzuki and Hyundai Motor, which were selling much cheaper and more economical vehicles.
