Shanghai Automobile Industry Corporation (SAIC), China’s biggest automobile maker, will launch its first vehicle in the Indian market next year – an SUV under the Morris Garages (MG) brand. The premium but affordable SUV will be produced in its Halol plant in Gujarat, which thecompany acquired in September last year from General Motors. SAIC expects to start trial production early next year.

SAIC manufactures over 7 million vehicles annually that includes both cars and commercials vehicles and it is also China’s biggest maker of electric cars. With a 23% stake in the Chinese market for cars, it brings a lot of experience in making products for emerging markets, and that is expected to give it an advantage as it takes on auto companies like Hyundai, Maruti and Ford in an already crowded SUV space.

“To be competitive, we will ensure that there is a high degree of localization of components for our products when they are launched. It could be as high as 80% to start with for our first product,” says Rajeev Chaba, president and managing director of MG Motor India. MG Motor India is a wholly owned subsidiary of SAIC Motor Corporation and is also the owner of the iconic British brand MG.

The company did not disclose the model it will launch by the middle of next year but the first Indian vehicle will possibly be a variation of MG ZS, a compact SUV it launched in the global markets in 2016. A company executive who did not wish to be named said that there is dearth of a good SUV in the price category of Rs 13-18 lakhs in India, presenting an opportunity for players to target this market. Last year, Renault and Jeep launched Captor and Compass in this segment and SAIC is expected to tweak its product to be in this segment rather than compete with lower priced SUVs like Maruti’s Brezza. “The MG product will have a premium image but will be a value product,” Chaba says.

In the last four years, SUVs is the fastest growing category of vehicles in India and most automotive companies have played their cards to exploit the trend. This year, India’s biggest car maker Maruti Suzuki is set to displace Mahindra and Mahindra, the long standing leader in the SUV segment, as its models like Ertiga and Brezza drove up volumes. When Fiat launched its Jeep Compass for Rs 16-20 lakhs, Toyota increased the price of its hottest selling SUV Innova by nearly 30%. Its new Innova Crysta is now a premium product and still boasts of waiting time for deliveries.

Auto experts feel that MG Motor in India would rather position itself as a premium vehicle maker to start with than a cheap competitor given the legacy of the Morris brand in India. This will be contrary to the strategy the company adopted in the UK where it launched the ZS last year at a substantial discount to competitors.

Going forward, SAIC has planned an investment of Rs 5000 crore in the country, a big chunk of it will be used up in its plant in Gujarat. Starting 2019, the company hopes to launch one new product every year as it stabilises its production capacity in the country.

Shanghai Automobile Industry Corporation

China’s SAIC makes its Indian moves