Foton Motor plans to manufacture and sell buses and trucks here.
China-based Beiqi Foton Motor Company, one of Asia's largest automotive companies, is exploring ways to make a foray into India. A tie-up with SpiceJet promoter Ajay Singh's company, Argentum Motors, is possible, for now.
Beiqi Foton (also known as Foton) is the largest light truck manufacturer in China, with interests in heavy trucks and buses as well. The company is eager to launch its bus range first in India, followed by the truck variety later, according to industry insiders.
The company is planning to import vehicle kits (completely knocked down) into India from China, which could be assembled here, making use of minimal components from the local market. It may launch local manufacturing operations after gauging the response for its products here.
Component makers confirm
Domestic auto parts suppliers having plants in Pune and Gurgaon said they had been approached by Foton for sourcing of auto parts, with the Chinese company having assured them of starting its local plans shortly.
Sources say Argentum Motors, which owns the defunct car plant of Daewoo at Surajpur, near Delhi, may roll out buses and trucks for Foton if the deal goes through. When asked, Argentum officials declined to comment.
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If all goes well, Foton will be the second big Chinese brand to enter India after SAIC Motor Corporation, China's largest carmaker, bought half the equity of General Motors India and announced plans for the local market.
Beiqi Foton is present in the low-floor city bus segment, as well as the intra city/state luxury segment. Improved government spending on promoting mass transport options within cities and increased demand by fleet and private operators have resulted in a robust demand for buses in India.
The deal with Argentum will be the cheapest option for the Chinese company. However, an investment of at least Rs 60-70 crore will be required for refurbishment, as well as for having a paint shop for the buses, say sources.
These bus kits will cost about $74,000 per kit (Rs 34 lakh), apart from other duties and taxes. It will be difficult for the company to effectively compete with market leaders Tata Motors and Ashok Leyland, considering their extensive service support and low cost of spares.
The Indian commercial vehicle sector, fourth largest market in the world, saw a robust pull-back in demand last financial year as compared to the earlier year. As of last financial year the country saw sales increase of nearly 25 per cent in heavy buses at 43,000 units and a 35 per cent increase in sales of heavy trucks at 201,000 units. The CV market this year is predicted to grow by 15 per cent, according to analysts.