Collectively GM and Ford control well less than 10% of India's auto market where 1.14 million passenger vehicles were sold in the year ended March 31st. But the allure of India is strong and prompting more investment by the two since only 7 of 1,000 Indian's own a car and not to mention the 300 million-strong middle class.
GM and Ford have struggled against compact car specialists Maruti and Tata Motors, both of India, and Hyundai of South Korea. And now Honda and Toyota are making a strong push that could prove to be another obstacle to expanding market share. Maruti is 54.2% owned by Suzuki of Japan and controls more than 50% of the market.
GM expects to increase sales by 60% this year to 50,000 autos and says its expects to exceed 200,000 by 2010. It has invested $300 million on a factory to produce a sub-compact with output of 140,000 cars by September 2008 and will expand another factory's capacity to 85,000 autos a year by December.
Ford wants to double its sales to 50,000 autos this year with plans to invest $75 million for a total of $450 invested in India.
Comment: While General Motors (NYSE:GM) seems to have gotten China right, it failed to understand India and may not be able to play catchup against domestic Indian, Japanese, and Korean rivals. This is the same story that's hurting GM and Ford (NYSE:F) in their home market. In fact, GM had a sizable equity stake in Suzuki (Tokyo: 7269), which with Maruti controls a majority of India's auto market, but GM sold its shares back to Suzuki earlier this year without capitalizing on Suzuki's position in India.
Tata Motors of India is listed on the NYSE and trades under ticker: (NYSE:TTM). Maruti Udyog which has the joint venture with Suzuki is listed on the Bombay Stock Exchange under code: (532500). Hyundai trades in South Korea under code: (005380).