Chinese auto makers bet big on India story

Increased investment by Chinese automobile manufacturers in the market here is likely to feature in Premier Wen Jiabao's talks with industry bodies on his visit to India.

Sources indicate apart from BYD Auto, which is known as Build Your Dreams, a well-known electric and hybrid car maker, Beiqi Foton, a leading  commercial vehicle maker and many small and medium sized auto ancillary companies will be looking at making investments in the country.

China's largest commercial vehicle manufacturer, Beiqi Foton, is understood to be considering setting up a greenfield facility in India shortly.

Industry sources informed Foton Motors has already done a feasibility study for its foray into the Indian market.

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The company has made enquiries regarding growth prospects in the Indian commercial vehicle industry and has also held talks with components manufacturers to determine the supplier base available for manufacturing vehicles locally.

A final decision, however, has not been taken on whether the company would look at entering the country independently or through a joint venture.

Foton is likely to be the second Chinese automobile company to enter the Indian market after Shanghai Automotive Industry Corporation (SAIC).

SAIC, present through a partnership with General Motors in the Indian market, is working on introducing five new models in the country by 2013.

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GM is jointly developing two light commercial vehicles of one tonne capacity with SAIC for the Indian market.

Besides, on the cards are two mid-size sedans and a larger utility vehicle.

The commercial vehicle segment in the country grew nearly 41 per cent between April and November, to 460,482 units from the 326,641 units produced during the corresponding period last year.

The segment is dominated by Tata Motors and Mahindra & Mahindra, who together account for 47 per cent of the market.

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Foton Motor, a subsidiary of Beijing Automobile Group Co Ltd, is the world's second largest commercial vehicle manufacturer after Daimler.

The company sold 602,021 vehicles in 2009, exceeding sales of Mercedes-Benz commercial vehicles for the first time since its inception in 1996.

Till October this year, the company had produced 558,000 vehicles, an increase of nine per cent as compared to the corresponding period last year.

Its sales grew 15 per cent from a year earlier to 571,100 units during the period.

The company is also working on developing a sedan, its first product offering in the passenger vehicle segment.

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BYD Auto, on the other hand, has sold 440,000 passenger cars in China and is expected to make a major entry in the US market in 2011 with its plug in hybrid and electric cars.

After coming into the limelight, BYD got the attention of maverick investor Warren Buffett who has forked out $230 million to pick up a 10 per cent stake in this company.

The company is a subsidiary of a rechargeable battery maker.