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Small-SUV4China’s leading carmaker SAIC Motor Corp and Great Wall Motor are eager to plot profit from India, one of the last frontiers in growth close to home.

With rising fuel consumption, a government that is keen to build better roads and a growing population, Chinese auto makers although late entrants, are currently waiting for permissions to clear to gain access to India.

SAIC in particular is evaluating what models to launch in India and is considering vehicles less than 4 meters in length because of favorable policies — sub-compact cars attract lower taxes.

While India isn’t new territory for SAIC Motor Corp and Great Wall Motor – both have been trying to break into the Indian market since 2012, a slowdown in the Chinese market and successive successes by other Chinese companies in India has given them new wind behind their wings.

Analysts believe that Gujarat, the home to General Motor’s factory will be the new base for the Chinese auto giants. The speculation is further fueled by the fact that 50 percent of GM India is owned by SAIC Motor Corp in a deal that was signed in 2009 when the Chinese government bailed GM out of a financial disaster.  Both companies are crunching numbers on India’s SUV industry specifically as the segment is expected to grow exponentially.

As a percentage of total sales, SUV’s have grown to more than 30 percent of the total luxury vehicles sold in India. Companies say in a diverse market like India, which has one of the most challenging road conditions, these all-wheel-driven SUVs become the first choice for the rich because they offer both functionality and comfort.

In February, 12 executives from Great Wall attended the India Auto Expo show to survey the market and learn government policy on diesel engines and emissions, an industry source in India told Reuters. Great Wall’s board of directors on March 7 voted unanimously in favor of a motion to establish a subsidiary in India, according to a stock exchange filing.

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