GM scraps plan to sell Indian auto plant to China’s Great Wall

The new GM logo is seen on the facade of General Motors’ headquarters in Detroit, Michigan, the United States, March 16, 2021. REUTERS/Rebecca Cook/File Photo

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NEW DELHI/SHANGHAI, July 1 (Reuters) – General Motors (GM) (GM.N) said on Friday it canceled the sale of a defunct Indian plant to China’s Great Wall Motor after failing to get regulatory approvals to amid a tougher New Delhi stance on investment from Beijing.

GM inked a deal to sell the plant to Great Wall (601633.SS) in January 2020, with the Chinese SUV maker expected to pay up to $300 million as part of a broader $1 billion plan invest to establish a presence in the growing Indian auto market.

The twice-renewed contract expired on June 30.

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“We were unable to obtain the required approvals within the deal’s timeframe,” George Svigos, executive director of communications at GM International, told Reuters.

“Our strategy in India remains unchanged and we will now evaluate other options to sell the site,” he said, adding the company “hopes to achieve a price that reflects the value of the asset.”

“Great Wall Motor will continue to focus its attention on the Indian market going forward and continue to explore new opportunities,” the Chinese automaker said in a statement on Friday, while confirming the termination of the factory deal.

The Indian government did not immediately respond to emails seeking comment.

GM’s deal with Great Wall came just months before India’s tougher stance on investment from neighboring countries, including China, in April 2020, making it the first major victim of the move that halted billions of dollars in capital inflows into sectors like autos and China has technology.

This was part of a broader crackdown by India on Chinese-linked companies amid deteriorating diplomatic relations. Separately, New Delhi has also banned more than 300 Chinese mobile apps, including TikTok, over security concerns.

“We hope that the countries concerned will adequately fulfill their obligation of openness and cooperation and create a fair, just and non-discriminatory business environment for foreign investors,” China’s foreign ministry told Reuters when asked for comment on the matter.

The move puts an end to a more than two-year effort by GM and Great Wall, forcing the US firm to resume its search for a buyer while continuing to spend money servicing some machines and tools at the factory.

When asked if the plant could be used to manufacture electric vehicles, Svigos said it would be suitable for a range of industrial applications, including non-automotive companies, and that GM would evaluate all options.

GM, which stopped selling cars in India at the end of 2017, has already sold its other plant to SAIC Motor Corp (600104.SS), where the Chinese automaker builds cars under its British brand MG Motor.

This will also put Great Wall back on the drawing board in its plans to enter India, which it saw as an important part of its global strategy to penetrate new markets such as Latin America, Thailand and Brazil.

Last year, Great Wall Brazil reallocated some of its $1 billion investment earmarked for India and reallocated some of its employees after delays in obtaining government approvals. Continue reading

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Reporting by Aditi Shah, Zhang Yan, Martin Pollard Editing by Mark Potter and Kim Coghill

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