Kia, PSA and SAIC Motor Companies Set to Make in India

As income levels rise and doing business becomes easier, more companies are looking to set up manufacturing bases in India to cater to a robust indigenous market for passenger vehicles

Global automotive giants are already heading towards India and China, the two largest markets in the world as Europe and North America suffer from demand saturation. Chinese carmaker SAIC Motor Corp, the Korean Kia Motors Corp and the French PSA Group have all thrown their hats into the ring hoping that the fifth largest car market in the world (set to be third largest by 2020) will reward their exertions with market share and heightened revenues.

To start with a small rundown of these three car companies. SAIC Motor Corp was founded 6 years ago, in 2011 and is one of the ‘big four’ Chinese automotive companies owned by the China government and made around $ 102 billion in revenue in 2014 (which is the most recent annual report released by the company) the company employs around 145,000 employees (as of 2013) and is headquartered in Shanghai.

While SAIC has collaborated extensively with foreign companies, such as Volkswagen and GM, its ambitious journey into India is one of the first of its kind for the company. Kia Motors, started in 1944, is the oldest South Korean car manufacturer in the world, and also the second largest manufacturer (behind Hyundai) in the country. As of 2016, the company had a revenue of about 52.7 trillion Won (about $45 billion) and employed around 50,000 people globally. Kia plans on setting up an Indian factory by 2019 and is set to invest around $1.1 billion for the same.

The company will start off by selling a mini sedan and a compact SUV, and will expand its portfolio over time. The PSA Group is the second largest carmaker in Europe after Volkswagen, with brands such as Peugeot, Opel Vauxhall and Citroën contributing to its $61 billion revenue and employs over 184,000 people. PSA hopes to commence operations in 2020 with a premium hatchback that will be followed by a sedan and a SUV

TechSci experts believe that the fight is quite balanced as of now. While Kia will be holding Hyundai’s hand through the pernicious entry process that all foreign companies face in India, SAIC will be leveraging its ally General Motor’s assets (and expertise) for its Indian adventures. The PSA group has already attempted two unsuccessful entries into the Indian market and has undoubtedly learnt some valuable first-hand lessons.

TechSci Research report “India Tire Market Forecast & Opportunities, 2022” highlights some of the major reasons for the renewed interest in India; people are getting smarter about buying vehicles, and, with increasing prosperity levels and disposable incomes, also demand better quality. GST is also a factor that must have, held weight with the companies.

The new tax structure has been in the works for several years now and is set to revolutionize industry by simplifying tax laws which works heavily to the benefit of companies. Given these factors, future looks positively radiant for the Indian automotive industry over the next few years.

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