SAIC trims stake in JSW MG Motor India amid policy hurdles
Chinese automaker SAIC Motor is preparing to reduce its shareholding in JSW MG Motor India and pause fresh investments, as regulatory restrictions and valuation disagreements cloud its operations in the Indian market.
SAIC intends to “substantially” dilute its current 49% stake in the joint venture but will continue to provide technology and products. Indian partner JSW Group has expressed interest in purchasing a larger stake, though both sides have yet to finalise terms due to differences over valuation.
Investment curbs and strategic realignments
The development comes in the wake of India’s 2020 restrictions on foreign direct investment from neighbouring countries, widely interpreted as measures aimed at limiting Chinese capital after border tensions. To navigate these curbs, SAIC formed a partnership with JSW Group, enabling MG Motor to continue its expansion in India, now the world’s third-largest car market.
While the move does not signal a complete withdrawal, it reflects the broader uncertainty Chinese carmakers face in India. Despite a recent meeting between leaders of both nations, regulatory bottlenecks remain. For instance, Indian companies are still awaiting Chinese approvals for the import of critical rare-earth materials used in electric vehicle production.
Parallel negotiations and tensions
Industry sources suggest that JSW is simultaneously in talks with another Chinese automaker, Chery Automobile, for a separate technology partnership to manufacture cars under its own brand. This parallel negotiation has reportedly raised concerns for SAIC, underscoring the strains within the partnership.
MG Motor’s trajectory in India
SAIC entered India in 2019 with the MG brand, investing more than $650 million and acquiring General Motors’ Gujarat facility with a capacity of 1,20,000 units annually. However, subsequent expansion proposals, including an electric vehicle investment under a government incentive program, were stalled in 2020.
In 2023, SAIC sold a significant portion of its holdings in the Indian subsidiary to local investors, including a 35% stake purchased by JSW for about $300 million. The deal valued MG Motor India at around $1.2 billion. Since then, JSW MG Motor has announced a $240 million investment plan for electric vehicles, which is still awaiting regulatory clearance.
Despite political and regulatory headwinds, MG Motor India has grown its sales from 16,500 units in 2019 to more than 61,000 in 2024, making it the second-largest electric vehicle manufacturer in the country after Tata Motors. However, with Tesla entering the Indian market, competition in the EV segment is set to intensify.
The road ahead
SAIC’s reduced role may pave the way for JSW to gain greater control over MG Motor’s future direction. Yet, questions remain over technology access, valuation agreements and how the joint venture will position itself in India’s fast-evolving auto industry.
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