BEIJING - China's leading truck maker Beiqi Foton Motor Co announced last week that it will invest 2.47 billion yuan in a plant in India to meet increasing demand in the world's fourth-biggest commercial vehicle market.

The company's board of directors has approved its plan to set up the Foton Motors Manufacturing India Plc in the state of Maharashtra with registered capital of about 626 million yuan, Foton said in the statement on its website.

Ninety-nine percent of the new company's registered capital is from Beiqi Foton, and the remaining 1 percent will be paid by a trading subsidiary of Foton.

The new plant, scheduled to begin operation in the middle of 2013, will have initial annual output of 96,000 vehicles that will later be increased to 120,000 units, Foton said in the statement.

As the Indian government imposes a 24 percent tariff on imported vehicles, local sourcing and manufacturing is a must for Foton to make a breakthrough in the market, the company said.

Improved infrastructure and development of logistics industry in India will create huge demand for commercial vehicles, the company said, adding that "the current market environment in India resembles the Chinese market 10 years ago and has enormous room for growth".

Currently the Indian medium and heavy-duty truck market is dominated by Tata Motors with nearly a 70 percent share.

The rest is shared by fewer than 10 manufacturers including Navistar and Mahindra, according to market data. Analysts said that it will be a challenge for Chinese manufacturers to break through.

Yet they noted that opportunities do exist as the market is huge and Foton could be a strong competitor to Tata in terms of product quality.

The leading Chinese automaker SAIC Motor Corp and its US partner General Motors are also eyeing the India market.

They announced at the end of 2009 the formation of a venture to build and sell small passenger cars and commercial vehicles in India. Media reports said they will start to assemble and sell two minivans in India under the Chevrolet brand next year.

Beijing-based Foton sold 680,000 vehicles in 2010, up 68 percent from a year earlier.

In addition to India, Foton also has plans to build plants in Russia, Brazil, Mexico and Indonesia before 2015.

The company said earlier this year that it will try to export high-end vehicles and engines to mature markets like North America, the European Union, Japan and South Korea as well.

China Daily

(China Daily 10/17/2011 page18)