China’s Chery Negotiates Potential JV With India’s Tata Motors

Tata Motors
TATA Motors, Pune office and plant (Photo: Wikimedia Commons/Rameshng/CC 3.0

Chery Automobile Co. Ltd, a China top state-owned automaker, is in advanced discussions to form an alliance for the Indian market with Tata Motors Ltd, India's fourth largest passenger vehicle maker. It emphasizes the aim of Chinese companies to expand into the world's fastest-growing major auto market.

According to a source, Chery proposes a joint venture in the form of a retail sales tie-up or technology sharing.

The source added that Chery's entry to India is yet to be finalized. The source said that senior management of Tata Motors was in China this year and they did visit the facilities of Chery as well.

He also said that a return visit by Chery's senior executives to India is also on the cards in the next few months and most of the leading Chinese companies are looking at the Indian markets since the potential is huge and India is the only market projected to grow significantly in the long run.

Tata Motors owns the Jaguar Land Rover unit. Since 2012, Chery signed a joint venture with a plant in Changshu. The source said that Chinese automakers don't understand the mindset of Indian customers as much as their Japanese rivals do. He added that even if they are interested, it is important to have a local partner to help them understand the market.

According to reports, papers leaked that Jaguar Land Rover, the Tata Motors-owned firm, could be sold to French car group PSA after losing £3.4billion between October and December. The leaked paper is believed to be a 'post-sale integration document' which outlines the benefits of the joining of the two companies. Tata Motors, however, denied the news.

The spokesperson from Tata Motor's said that it is highly speculative and they do not comment on market rumors. Chery chairman Yin Tongyao was cited in the 2017 report of Economic Times when he said that his company may explore entering India with or without partnering Tata Motors.

In the coming years, sales in China are projected to stagnate causing major companies to seek alternatives. India attracted the companies because of its promising auto market. In the next few months, China's SAIC Motor Corp. Ltd and the British-owned MG Motor will launch its first product. Great Wall Motors also formed a team to set up independent operations in India. The State-run Changan Automobile Co. also plans to explore the opportunities of the Indian market.

© 2019 Business Times All rights reserved. Do not reproduce without permission.
Sign Up for Newsletters and Alerts