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Old 04-07-2006, 02:52 PM   #1
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Default Chinese auto makers ready to go it alone

Chinese auto makers ready to go it alone

http://www.atimes.com/atimes/China_B.../HD08Cb06.html

BEIJING - For years, Shanghai Automotive Industry Corporation (SAIC), a government-owned behemoth, has worked side by side with General Motors Corporation (GM) and Volkswagen AG on world-class assembly lines to build cars for the Chinese market.

Now, the giant auto maker is getting ready to use the technical expertise and experience it has gained from these partnerships - which turn out hundreds of thousands of Buicks and Chevrolets as



well as VW Santanas and Passats a year - to make its own high-end sedan.

Shanghai Automotive's shift from an ally of its foreign partners to a potentially dangerous rival is a sign of sweeping changes ahead for auto makers in the fast-growing China market, which has become an increasingly important source of sales and profits for US and European auto companies.

Prodded by Chinese economic planners, large state-run companies that have joint ventures with other foreign manufacturers, from Ford Motor Corporation of the US to Japan's Suzuki Motor Corporation and South Korea's Kia Motors Corporation, are also moving to develop and sell more vehicles under their own brand names. The push comes amid a broader questioning of the role that foreign companies and brands should play in China's economy.

"This is a watershed in the development of the auto industry in China," said Michael Dunne, president of consultancy Automotive Resources Asia. "The Chinese formed joint ventures for one purpose: to learn how to do it themselves one day. That day is here."

Zhu Xiangjun, a spokeswoman for Shanghai Automotive, said the company's launch of its own brand will foster a "healthy" rivalry that will "drive" the joint ventures to "further improve their competitiveness". The company is expected to release more details about its new-car development plans Monday.

In a prepared statement, GM said it "understands" Shanghai Automotive's "desire for further growth" and is confident "SAIC recognizes that the success of both companies in the China market is closely linked to the success of our joint ventures". Volkswagen said: "Volkswagen and SAIC keep a close and long-lasting partnership. We understand SAIC's wish to build up an own Chinese car brand. We offered our support in the past and still do at present."

The new car from Shanghai Automotive, China's largest passenger car maker, will be a modified version of MG Rover Group Ltd's Rover 75, a luxury, four-door sedan that will compete head to head with some cars produced by Shanghai Automotive's joint ventures with GM and VW. Shanghai Automotive bought the plans for the cars and the rights to make them from MG Rover Group before the British company filed for bankruptcy in April 2005.

Shanghai Automotive says its new car, which hasn't been named, will start rolling off the assembly line within the next six months. Sales in the domestic market will start soon after. The company also plans to push into its partners' home turf, with exports to Europe and the US. It is aiming to start sales in Europe as early as 2007.

Succeeding with such ambitious plans won't be easy. "It's risky for local companies to start at the high end. Their brands aren't strong enough," said Yale Zhang, an analyst at CSM Worldwide in Shanghai.

Over the near term, foreign auto makers have few alternatives. Under Chinese regulations, to make cars in China, foreign companies must form joint ventures in which their Chinese partners own no less than 50%. The major multinationals have already teamed up with the biggest and most promising local firms. So, observers say, they have little choice but to keep making their cars and encourage their partners not to compete too directly with them.

For now, few analysts expect Shanghai Automotive or China's other state enterprises to suddenly walk away from their very substantial, and profitable, investments in joint ventures with foreign firms. But, they say, balancing cooperation and competition is likely to become increasingly difficult.

GM's China joint ventures have become especially critical to the company at a time when it is piling up large losses in North America. For 2005, GM reported preliminary profit of US$327 million from its affiliates in China, compared with $417 million the year before.

Already, sales of homegrown Chinese cars, many made by small manufacturers, are starting to take off. Last year, 26% of passenger cars sold in China were Chinese brands, more than double the share in 2001, according to Automotive Resources Asia. Heightened competition is pushing down prices and squeezing profits.

Now that Shanghai Automotive and the country's other major vehicle manufacturers are getting into the game, it is likely to accelerate the trend. Shanghai Automotive employs about 50,000 people. Last year, its manufacturing ventures made more than 600,000 vehicles, dwarfing the output of Chery Automobile Co and Geely Holding Group, two smaller auto makers that have garnered attention abroad because of their export ambitions.

Shanghai Automotive traces its roots back to factories that made tractors, buses and shiny, black Phoenix sedans for party cadres in the years after the communist revolution. The company stopped making its own vehicles in the mid-1980s when it signed a joint-venture deal with Volkswagen. Partnership agreements followed with dozens of parts makers and, in 1997, with GM.

Shanghai Automotive's recent efforts say a lot about industrywide strategies for gaining access to know-how and technology to strengthen China's domestic manufacturers. The company says it has gleaned "rich experience and resources in every field" from its work with GM and VW. In addition to manufacturing ventures, Shanghai Automotive insisted on a joint research and development (R&D) operation with GM. Staffed by top GM engineers and designers and their local counterparts, the center has been doing increasingly sophisticated design work for GM cars sold in China.

Shanghai Automotive is hiring experienced engineers and managers from these joint ventures to work on its own car projects. It is also bringing in veteran executives from foreign car makers. Wang Xiaoqiu, general manager of the Shanghai Automotive unit that will be making the new sedan, for example, once worked for Shanghai Volkswagen. Its R&D head, Wang Dazong, is a veteran of GM and parts supplier Delphi Corporation.

Shanghai Automotive says it is planning to open a design center in Europe later this year. And it has brought in engineers from Korean sport-utility vehicle maker Ssangyong Motor Co, in which Shanghai Automotive bought a controlling stake in 2004.

Chinese and foreign auto makers are already grappling with the implications of the state enterprises' solo efforts. Xu Liuping, chief executive of government-controlled Changan Automobile Group, which has joint ventures with Ford and Suzuki, said his company plans to roll out four of its own new passenger car models within the next year. "Of course, there will be a certain degree of competition," Xu said. "But my view is that different brands and products will have different target customers."

(Asia Pulse/XIC)
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Old 04-07-2006, 03:04 PM   #2
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Succeeding with such ambitious plans won't be easy. "It's risky for local companies to start at the high end. Their brands aren't strong enough," said Yale Zhang, an analyst at CSM Worldwide in Shanghai.

See even they know its not easy to go the next step...but chinese car companies are prepared to face the challenges..and have the time to do it...


i think they will succeed....good article edge
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Old 04-10-2006, 07:35 PM   #3
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China's SAIC set for car exports

http://news.bbc.co.uk/2/hi/business/4895536.stm

Chinese carmakers want to tap into demand for cheaper vehicles
SAIC, the Chinese carmaker that bought the technology of bankrupt UK firm MG Rover, has unveiled plans to make its own brand of vehicles for export.
It expects to make 600,000 SAIC-branded vehicles a year by 2010 and the first model is due to be ready this year.

SAIC, which recently spent 3.68bn yuan ($460m; 263bn) on a new production division, said it would spend a further 10bn yuan to increase output.

SAIC said it was planning "more than 30 models" for release between 2007-2010.

The company, which has yet to reveal its new brand name or logo, said its vehicles would be priced between 65,000 yuan and 300,000 yuan.
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Old 04-12-2006, 12:20 PM   #4
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Did SAIC acquire any technology from it's JV with GM and Volkswagen?
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Old 04-12-2006, 01:55 PM   #5
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Quote:
Originally Posted by hazik
Did SAIC acquire any technology from it's JV with GM and Volkswagen?
They could not acquire it; they would have to buy it or license it since the JV is a seperate company. GM/VW would not be amused if they just acquired it!

They don't appear to be applying this rule to their Ssangyong JV though! http://auto.sina.com.cn/news/2006-04...04178987.shtml
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Old 04-13-2006, 01:25 AM   #6
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Quote:
Originally Posted by Windy
They could not acquire it; they would have to buy it or license it since the JV is a seperate company. GM/VW would not be amused if they just acquired it!

They don't appear to be applying this rule to their Ssangyong JV though! http://auto.sina.com.cn/news/2006-04...04178987.shtml

SAIC owns a majority stake in Ssangyong. Are there new cars going to be based on Rover technology or Ssangyong tech? And where'd you learn to read Chinese?
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Old 04-13-2006, 05:18 PM   #7
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Quote:
Originally Posted by hazik
SAIC owns a majority stake in Ssangyong. Are there new cars going to be based on Rover technology or Ssangyong tech? And where'd you learn to read Chinese?
They are saying the cars will be based on MG-Rover technology and the SUVs on Ssangyong technology. I suspect a lot will be shared even though they say it wont - I don't trust anything SAIC say!

Quote:
Originally Posted by hazik
And where'd you learn to read Chinese?
Its not so difficult!

There are some lessons here:
http://en.chinabroadcast.cn/ce_chinese/

But I read 上汽 as "Shanghai Auto" - ie I read it in english not in chinese so don't need those lessons! 南汽 is "Nanjing Auto" so already you know the character for "Auto"
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Old 04-14-2006, 05:55 PM   #8
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Chinese automaker SAIC spells out plans for its own brand; exports may include U.S. market

| Automotive News / April 14, 2006 - 6:00 am


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BEIJING -- Shanghai Automotive Industry Corp. has spelled out plans to produce its own brand of car for China and for export, possibly to the United States.

The company already assembles cars for China through partnerships with General Motors and Volkswagen AG.

The first model will be a large sedan based on the Rover 75 platform. SAIC acquired the intellectual property rights to the Rover 75 and 25 platforms last year before MG Rover's collapse.

Prototypes of the sedan, which will come with an automatic transmission and V-6 engine, are undergoing safety testing, says David Lindley, chief engineer of SAIC Automotive Engineering Academy. Lindley, a former MG Rover engineer, also is general manager of SAIC Motor Overseas (Europe) R&D Center in England.

Production of the sedan will begin in late 2006, and the model will be launched in 2007. Exports also will begin in 2007.

"Initially, we will target the markets which are former MG Rover markets - the United Kingdom and maybe Spain," says Andy Chen, spokesman for SAIC Motor Manufacturing Co. "In the long-term, (we will export to) the United States and Japan." SAIC Motor Manufacturing is the unit set up to manufacture and market SAIC's brand.

The second model will be a family sedan based on the same platform. It is being developed at the r&d center. At the end of the concept phase, which will be soon, development will pass to SAIC's engineering academy in Shanghai, Lindley says.

As for the name, SAIC hasn't decided on one but should announce its choice by the end of June, SAIC managers say. Sources say the names "Shanghai" and "Phoenix" are being considered.

SAIC aims to introduce five product lines over the next four years, including a hybrid vehicle. More than 30 variations on the various models will be offered, SAIC says. Prices will range from 65,000 yuan to 300,000 yuan, or $8,110 to $37,500 at current exchange rates.

"Our products will not be niche products," says Wang Xiaoqiu, general manager of SAIC Motor Manufacturing. "They will appeal to a wide segment of the population."

By 2010, SAIC plans to sell more than 200,000 of its own brand cars, including 50,000 exports. European sales will be through a wholly owned sales subsidiary.

An overseas dealership network will be established in the second half of 2006, SAIC said without providing details.

The cars will be assembled at an existing plant in Yizheng in Jiangsu province, a few hours from Shanghai. SAIC also is building a plant in the Shanghai suburbs near the Shanghai Volkswagen plant.

Total annual vehicle production capacity will reach 300,000 by 2010, and engine production capacity will hit 400,000, SAIC says. That will include the ability to produce 10,000 alternative-fuel vehicles such as hybrid and hydrogen fuel cell vehicles.

Current vehicle production capacity is 120,000, and engine production capacity is 170,000.
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Old 04-15-2006, 12:46 AM   #9
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I think they should just stick with SAIC as their brand name. Sounds kinda cool.
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