Nov. 10 – The entry of SAIC Motor into the Indian market indicates that Chinese automobile brands are determined to go global and poised to have a huge impact in one of the region’s still largely untapped markets.

Despite the Suzuki brand doing well in the Indian market it is still dominated by local brands such as Tata, Mahindra & Mahindra and Bajaj. China auto manufacturers have big ambitions for the India market because it offers access to a nearby region with pent up domestic demand and a relatively free open market.

SAIC Motors has finalized a deal with General Motors for a 50 percent stake in GM’s India subsidiary. In the process, the company will bring in its light commercial vehicles that will compete with established players such as Tata Motors, Mahindra & Mahindra and Piaggio.

Premier Ltd., the makers of the ubiquitous Premier Padmini and one of India’s oldest carmakers, entered into an agreement with China’s Zotye to put together and retail its compact sport-utility vehicle in the country. The product will be branded as a Premier and will give Zotye the chance to enter the market.

Nissan has indicated that some of its manufacturing parts will be sourced from China as it gets ready to release its small car for India. This makes sense because Nissan has already achieved economies of scale in China which will in turn help its other global operations, particularly India and Thailand, in terms of cost-control.

The global auto industry’s attention has shifted to China since the global financial crisis broke out last year. A bankrupt GM sold its Hummer business to Tengzhong, a Chinese construction equipment maker. A few weeks ago, Ford announced that Geely Automotive of China was its preferred choice to buy out its Volvo Cars division in Sweden.

This will have knock on effects in India where Volvo Cars are already present. India meanwhile has been developing a different auto model compared to China; taking the ‘small is beautiful’ route. Chinese manufacturers have been producing relatively large sedans but as the impact of the green movement and increasing cost of oil get factored in, it’s the Indian business model of small and cheap that is becoming fashionable and necessary.

China will want to access the India market and in time event export from Indian factories either in kit or complete form to China. Indian wages are about half those in China thus making production costs more viable.

Wuling trucks from GM India and SAIC Motors will be the brand to look out for. Tata has neglected the small truck market and only manufactures small cars. If Wulong’s small trucks – ideal for Indian farmers – can corner the market, Chinese-owned brands manufactured in India may become a common sight in Asia, Africa and Latin America.

The Chinese auto market has overtaken the U.S. market with average monthly car sales of a million units. Indian car manufacturing and sales are expected to also soar in the future and will do so backed by Chinese investment among others.