General Motors is likely to defer capacity expansion plans at its new Talegaon unit in Maharashtra amid the global liquidity meltdown while Mercedes expects the financial crunch to hit sales in India, local media reports said.

GM is keeping a close eye on market conditions before deciding to start a second shift at the Talegaon unit, the Economic Times of India said.

It wants to take a 10% slice of the passenger car market by the end of 2010. Talegaon can currently build 190-200 cars with one shift and a second shift would boost this to 285-300.

GM India chief P Balendran told the paper: "We are confident to start a second shift by next year. Our plans for India remain unchanged despite a global meltdown.

"We will introduce new products in the market in 2009 as we have seen that volumes are coming from new launches in the market," Balendran added.

The company had targeted 85,000 sales this year versus 60,000 units in 2007. "We are hopeful to achieve a sales target of more than 82,000 units this year," Balendran said.

Meanwhile, Mercedes Benz-India's director of sales and marketing, Sanjiv Sahajwala, told the Financial Express that rising inflation coupled with an acute liquidity crunch for auto finance was likely to impact sales in the next few months. The automaker is also not ruling out price increases, either.

He told the paper: "Though we have registered a growth of 56% in sales in the first three quarters of this year as compared to the previous year the percentage of auto financing has declined 25% which has certainly affected us. This is a cause of concern and we are keeping a close watch to counter the slowdown."

Mercedes-Benz sold 3,001 models in the first three quarters of this year versus 1,912 units a year ago

The company will move local production to a new plant in Pune from its existing plant in Chikhali by the first quarter of 2009 to meet increased demand.

It is also planning to launch sporty AMG variants and the Viano commercial van before the end of this year, the report added.

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