Investment plans to the tune of $5 billion could be delayed by over two years amidst the ongoing standoff between India and China
Chinese automakers had revealed a number of products at the Auto Expo 2020 in February this year. In fact, this year’s auto expo had the highest Chinese influence, who had announced investment plans to the tune of Rs.34,000+ crores. But the ongoing standoff between India and China has resulted in derailment of plans.
Auto consumers are shying away from buying vehicles that have any Chinese connection altogether. This is not only due to the ongoing border tensions but also in view of the COVID-19 virus that is said to have originated in Wuhan, China. Under this scenario, companies such as Great Wall Motors, Foton, Changan and BYD Motors face an uncertain future.
Chinese Auto manufacturers in India
MG Motor has completed two years in the Indian market. BYD has just launched its range of electric buses while Great Wall and Changan Auto were set to commence operations in India shortly. Investments of around $5 billion could see unprecedented delays of around 2 or more years while all negotiations with Chinese companies have now been put on hold.
Great Wall Motors (GWM) was expected to take over the General Motors plant in Talegaon, Maharashtra. This plan was initiated earlier this year but could now be delayed to somewhere in 2021 or even further. The Haval brand launch could move to 2022 as against an earlier plan of 2021 while GWM vendor Nobo Automotive, which had plans to enter into an alliance with a local partner, has also seen some delays.
Changan Automotive was another Chinese company seeking to set up base in India but this project has also been put on hold and considering the present scenario may not come to fruition anytime before 2023-24. The alliance between Bird Electric Mobility and Haima Automobiles for launch of EVs has also been deferred by over a year.
Sourcing auto spares
However, even as a host of global OEMs have set up base in India and there are curbs on imports from China into India, it should be understood that a larger incremental FDI in the auto sector in India could only be brought in from Chinese automakers.
Experts opine that the US elections with Joe Biden set to become the new President could play a major role in offering some insight into the border situation and resumption of trade practices.
Not only has the Indo-Chinese tensions affected auto investments but also the supply of spares. It is a known fact that automakers depend on China for spare parts. Indian OEMs, more so for electric vehicles and two wheelers, source at least 26 percent of components from China and they have been severely affected.