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SAIC clarifies "Indian company loses control"

2024-03-04 Update From: AutoBeta autobeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)06/27 Report--

On the evening of June 26th, SAIC official WeChat issued a "clarification on the recent false reports about SAIC MG India", which showed that there were recent media reports that "SAIC MG India had been forcibly acquired shares at a low price and lost control", which seriously deviated from the facts.

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On June 22, a report from the Hindustan Times attracted wide attention in the domestic automobile industry. India's Jindal Southwest (JSW) is trying to acquire a stake in MG Motor India, a wholly owned subsidiary of SAIC, the report said. After the acquisition, JSW will own 45 per cent of SAIC MG India's 45 per cent stake, 5-8 per cent of dealers and Indian employees, and 49 per cent of SAIC. As a result, SAIC will lose control of its Indian subsidiary. In addition, for this acquisition, SAIC initially asked MG India's assets to be valued at US $80-10 billion, but after negotiations, MG India's asset valuation was reduced to US $12-1.5 billion, and said that the acquisition had strong support from the Indian government.

In response to the above report, SAIC said: "SAIC's international operations strictly abide by the policies and regulations of China and the countries where its overseas operations are located, fully respect market laws, and fully grasp autonomy. The equity transaction of SAIC holding MG India involving MG India needs to be approved by the Chinese government, and we will release official information in due course. "

According to the data, JSW Group is one of the largest commercial groups in India, involving businesses such as steel, energy, cement, infrastructure and motor vehicle manufacturing such as motorcycles and tricycles. JSW Group is part of O.P.Jindal Group, a steel and energy complex enterprise group founded by Indian tycoon Aum Prakash Jindal, which currently has total assets of US $17.5 billion.

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MG India is the branch of SAIC Mingjue Automobile in India. MG, whose full name is Morris Garages, was founded in Oxford in 1924 and is a century-old British sports car brand. In July 2005, Nanjing Automobile Group Co., Ltd. acquired British MG Rover Motor Company and its engine production division, and changed its name to Nanjing Mingjue Automobile Co., Ltd.; in April 2007, Shanghai Automobile Group Co., Ltd. acquired Nanjing Automobile Group, and then Mingjue became an independent brand of SAIC Group.

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SAIC's distribution of the Indian market began in early 2017 and was the first Chinese car company to enter the Indian market. General Motors sold one of its car plants, Harrol, Gujarat, to SAIC, which then set up MG India in India and invested 3.275 billion yuan to revamp the plant. After two years of investment and construction, MG Harrol Base in India was completed and officially put into production in April 2019. According to the plan, the plant has an annual production capacity of 80,000 vehicles and is expected to launch at least four models to the Indian market.

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So far, MG has launched a total of five models in the Indian market, but the share of MG in the Indian market is not high. In the past, MG ranked seventh in the Indian market in terms of new car sales, with a market share of 2%, according to the data, but its market share has continued to grow since the MG plant was built and put into production.

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According to the Association of Indian Automobile Manufacturers, car sales in India were 4.7255 million in 2022, up 25.7% from the same period last year, surpassing Japan for the first time to become the world's third largest car market after China and the United States. Of this total, sales in MG India were 48000 vehicles, up 19.06 per cent from the same period last year. According to the latest data, cumulative car sales in India from January to May in 2023 were 1.6819 million, an increase of 11.7% over the same period last year. Subdivided into MG, its cumulative sales were 27000, up 47.61 per cent from a year earlier. Of these, Indian car sales in May were 334499, up 13.8 per cent from a year earlier, making it the best May sales in Indian history, while MG was the only Chinese brand on the list, up 24.9 per cent from a year earlier to 5006, also its best ranking since it entered the Indian market.

Earlier, MG India said it would sell 3/4 of its electric cars in India by 2028 by launching four to five new models.

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In this clarification, SAIC pointed out: "under the guidance of national policy, SAIC began to export its own brand cars in bulk since 2007, and its own brand products represented by the MG brand have entered more than 90 countries and regions around the world. Chinese technology, products and services have won the favor of local consumers. This year, SAIC's total sales in overseas markets are expected to exceed 1.2 million vehicles, and achieve large-scale profits. " In addition, according to people familiar with the matter, SAIC is seeking to cooperate with local companies by increasing capital and shares in order to further realize the development of MG India in the local market, but SAIC will not lose control of MG India.

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