Click it and Unblock the Notifications
SAIC to Reduce Stake in JSW MG Motor India JV - Policy Issues Still A Pain
Chinese automotive giant SAIC Motor plans to reduce its 49 per cent stake in JSW MG Motor India joint venture and suspend fresh investment, claims a new report by Reuters, citing multiple sources.
While SAIC will cut down its ownership levels in the MG Motor India joint venture with JSW, it is expected to continue providing technology and products to the venture. JSW Group is in talks to purchase a large share of SAIC's holding with the goal of becoming the majority shareholder, though valuation terms remain unsettled.
India introduced new FDI restrictions in 2020 for investors from neighbouring countries following border tensions with China. These measures have limited SAIC's ability to inject further capital into MG Motor India and raised questions over whether returns on past investment can be repatriated smoothly under current rules.
SAIC entered India in 2019 through the MG brand, investing more than US$ 650 million and acquiring General Motors' former Gujarat plant. The facility was retooled for an annual capacity of about 120,000 vehicles. Incentive requests linked to electric vehicle policy were later rejected, narrowing expansion options.
In 2023, JSW acquired a 35 percent stake in MG Motor India from SAIC for around US$ 300 million, valuing the joint venture at approximately US$ 1.2 billion. JSW has since submitted a fresh proposal for a US$ 240 million electric vehicle investment, which is still awaiting government clearance.
SAIC India Investment Timeline
| Year | Event | Investment / Stake |
|---|---|---|
| 2019 | SAIC enters India, acquires GM's Halol plant | US$ 650 million (₹4,580 crore; 1 USD = ₹70.414) |
| 2020 | FDI restrictions on Chinese investment introduced | - |
| 2023 | JSW acquires 35% stake in MG Motor India | US$ 300 million (₹24,773 crore; 1 USD = ₹82.579); JV valued ~US$ 1.2 billion (₹99,088 crore; 1 USD = ₹82.579) |
| 2024 | JSW MG proposes new EV investment | US$ 240 million (₹20,084 crore; 1 USD = ₹83.682; pending approval) |
| 2025 | SAIC prepares to reduce 49% stake | Valuation under negotiation |
Sales growth for MG in India has been strong. Sales og MG cars in India hav gone from about 16,500 units in 2019 to over 61,000 units in 2024. The brand has become one of India's top EV sellers, second only to Tata Motors.
MG Sales Progression in India
| Year | Sales Volume (Units) |
|---|---|
| 2019 | 16,500 |
| 2020 | 23,000 |
| 2021 | 40,000 |
| 2022 | 48,000 |
| 2023 | 54,000 |
| 2024 | 61,000+ |
DriveSpark Thinks
SAIC's decision to dilute its stake is expected to shift greater control iver MG Motor India to JSW in shaping the company's strategy. At the same time, JSW is exploring a technology licensing arrangement with Chery Automobile, which would allow it to produce cars in India without any equity participation. How this changes MG operates in India will only be known once JSW and SAIC manage to come to an agreement over the evaluation of the stake the latter wants to disinvest.
Continue with Google