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Discussion Starter · #1 ·
Thanks to Windy for spotting this.....

April 19, 2007, 12:48AM
SAIC Eyeing Rival Nanjing Automotive


By ELAINE KURTENBACH AP Business Writer
© 2007 The Associated Press


SHANGHAI, China — Chinese automaker SAIC hopes to cooperate with rival Nanjing Automobile, owner of British carmaker MG, in developing their own-brand cars, SAIC's chairman Hu Maoyan said Thursday.

SAIC, local partner with General Motors Corp. and Volkswagen AG, lost out to Nanjing Automobile in bidding for bankrupt MG Rover Group in 2005. Instead, Shanghai-based SAIC bought technology for two MG models, the 25 and the 75.

SAIC has since launched its own-brand version of the Rover 75, called the Roewe. Nanjing Auto recently rolled out its version of the MG sports car, seeking to revive the historic brand.

"I can declare we are looking forward to cooperation with Nanjing Autos," Hu told reporters on the sidelines of the Shanghai Auto Show, which formally opens on Sunday.

Hu asserted that since both companies were state-owned, it would make sense for them to cooperate.

"We need to use state assets more efficiently and effectively," Hu said. "We believe the leaders of Nanjing Auto are smart enough to understand this principle."

"I believe the government would be glad to see such cooperation," Hu said, without elaborating. He added that "we are always looking for international and domestic partners."

State media have reported that Nanjing Auto is facing difficulties in financing the overseas expansion based on its acquisition of MG, which included its Longbridge factory in central England. The company, which is based in the eastern city of Nanjing, also recently has appeared to be pulling back from a project to build an auto plant in Ardmore, Oklahoma.

Some reports have suggested Nanjing Auto or its joint venture with Italy's Fiat SpA, Nanjing Fiat, might be a target for a takeover by Chery Automobile, China's biggest independent automaker, or some other company.

The spokesman for Nanjing Auto was not immediately available for comment.

The Chinese government has long encouraged consolidation in the auto sector to nurture a handful of manufacturers able to compete in global markets. A tie-up between SAIC and Nanjing Auto would suit that policy.

However, the auto industry still remains divided by regional rivalries _ with new manufacturers still joining the fray. The most recent official figures put the total number of auto manufacturers in China at nearly 150, up from 130 about a decade ago.
 

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Discussion Starter · #2 ·
Personally I have a suspicion that Nanjing will shun SAIC and work with Cherry as Nanjing are actually talking to Cherry according to reports elsewhere. Sounds all a bit too late and a bit too desperate from SAIC. I thought they were confident in being able to mass produce the Roewe 750 and I thought they owned the exclusive IPR's. They don't sound confident do they...
 

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"We need to use state assets more efficiently and effectively," Hu said.

Does SAIC understand about competition?

I really am starting to think that they don't!

There are a supprising number of comments in the Chinese press today similar to:

"Mass production of the Rong-wei needs Rover production line support. SAIC can certainly start from scratch, but there is off-the-shelf equipment and production lines in China, why should they then go round in circles wasting funds and ultimately delay the the steady implementation of the independent brand strategy?"
 

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合作

Cooperation between SAIC and Nanjing seems like a natural progression of previous negotiations between SAIC and Yuejin/Iveco dating back to 2002. And "according to sources close to both companies", when the contest for the MG spoils broke out, the central government told the two companies "to work things out", said Automotive News on January 10,2006.


mgrovernut said:
......Hu asserted that since both companies were state-owned, it would make sense for them to cooperate......
Despite this view of SAIC's Hu Maoyuan, there is still the fact of a huge rivalry between these two large municipalities (Shanghai and Nanjing) that might make that hard to do. Perhaps the Nanjing-Wuhu rivalry is not as great.

In any case, cooperation would nicely diffuse the MG design and IP rights feud.
 

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How to explain this to you, a lot of things you couldnt understand if you as a British only focus on MG or Rover. Before MGR collapsed, there was a possible merge of SAIC and NAC like a lot of merges had happened in Chinese auto industry, it's a macro rearrangement of state companies to increase the competition ability against foreign giants, usually failed one like NAC will be merged into one of 3 bigs like SAIC. Since dramatic event of MGR bid and some other terms couldnt get agreement, the merge was suspended.

As for this news, my opinion is they are just higgling. And it's clearly both government and public give a lot of pressure for them, no one want them waste state owned money like they did in MGR bid.

Cherry, although sells lots of cars under its own brand, is still a medium comany. The most he could get is the shares in NAC-FIAT, Cherry has no such ability to eat up NAC.

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1st part

Here is an analysis writen by a journalist, it will help you to undertand the macro view of this event.

http://justdoanddo.blog.sohu.com/42712094.html

Perhaps the olive branch of the Southern Automobile long-awaited steam. Whether it is only steam and South SAIC Rover project started, or as an opportunity to Rover, SAIC integration, mergers and Southern steam, In south steam can help reduce friction and reduce the waste of state resources, Both sides consider all possible forms of cooperation, not let cooperation has been somewhat embryonic mortality in the bargain among or make exorbitant demands. Text / Tao Liu

April 19 morning, SAIC will meet the media. In the field is known as the moderator of the conference final question to be answered, The Shanghai Automotive Industry Corporation Group Consortium spirits remained high, offered to give reporters a chance to ask questions. This last issue is perhaps most like to take this car show it in one of the topics mentioned : SAIC Rongwei Lord who can steam with South cooperation, not cooperation. The answer came as a surprise to all the media presence expected Consortium : "I…… FAW Group Corporation is very willing to conduct friendly consultations with the South. After all cooperation to the efforts of the two sides. Our door is always open. I believe we can properly deal with these steam with the South we are concerned about the problem of high efficiency…… "

Rover and SAIC on the project in the South steam divide and rule has been great concern to all.

Look at the SAIC. Strategically, the acquisition of overseas SAIC is determined to build their own brands since 2003 when one of the four trails; from hard power, said in the capital, talent, technology accumulation. SAIC can say is the most qualified person in China's automobile manufacturing enterprises, as well as the deepest accumulation; in the brand name, Shanghai GM's marketing is the industry-recognized standards. It can be said that SAIC eager to put the past few decades in our own brands, the accumulated strength concentrated above.

Look at South steam. It can be said that Rover automobile meaning more like a shield for the South, or in the future be negotiated mergers and acquisitions, a piece of weight.

Steam is a Southern originally automobile, and other commercial vehicles complete the product mix and enterprise groups. However, it is not in China's automobile industry times, the best of times energy savings, but rather the majority of the projects under the quest decline. In particular, a joint venture with Fiat again for a couple of losses. The extent, foreign automobile finally decided to abandon the South to find partners, even inadvertently South steam treatment dying, "one race." Fiat to abandon the steam from the Southern perspective, the following two points : First, the human Southern Steam, has been facing financial and other resources are exhausted; Second, put aside all South automobile license, and decided to "famous city" bet everything.

But I think that both in life, you have to speak since. What do you need to prove what you can do. South steam in the past have shown that this is a lack of core competitive power of enterprises. According to the conventional laws of the market economy and business logic. Steam is normal and the future of the South is waiting to be mergers and acquisitions, into liquidation. And the Rover project, South steam seize the final wave last straw. South Rover automobile do not 100% sure. However, the projects under the cloak of our own brands, at least temporarily alleviate the Southern Steam integrated, merged with destiny.

Interject here. State policy has stressed excess production capacity, to restrain production. but so far have not heard ... the car was ordered because of a long bankruptcy losses, or through mergers and acquisitions. China's auto industry, already face international competition, but not like appearance. Because local government is the protection and many other reasons, not in accordance with the rules of the market of nearly 100 enterprises in the survival of the fittest.
 

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2nd part

Today, SAIC steam south dished out an olive branch, in the hope that enterprises from the two Rover project into effective integration of divide and rule. Steam over the strength and style it is not necessary and there is no reason for the initiative shown goodwill gesture. I believe that this time around there are two possibilities behind dished out the olive branch. First, the large scale production needs Rongwei Rover production line support. SAIC It would be starting from scratch, but some existing equipment, production lines in the country, then why their beating about the bush, waste of funds, manpower is not to say that ultimately the independent brand strategy is the steady implementation delays. Second, the relevant state departments to SAIC, South integration raise steam, the alliance, SAIC for cooperation, the start position. Mr. Wang Haoliang, it is probably not unrelated to the recent strong public relations. In two sessions, on the CCTV "dialogue" has shown the right to build its own brand deeply to heart and lung. Perhaps departments forward the contents, but the state tens of billions of funds would not vote for a no protection projects.

Sentence inserted here. "11th Five-Year Plan" proposed to vigorously promote independent innovation, and create their own brands. But not all projects must support our own brands? The market is now flooded with all kinds of so-called independent brand owners, the number of phantom. based on the number of brand-name, demanded a huge sum of money to the state for real?

Our people's money is not the banks money? 20 years ago, and our money was earned by foreign investors. Now, we have to foot the bill for various Reality's own brands, it……


All in all, the face of SAIC threw out the olive branch, the South is not acceptable then steam? The author believes that the present situation may be the long-awaited South steam. I only hope that both SAIC and Southern steam cooperate only on the Rover project, or to the Rover as a turning point, by SAIC integration, mergers and South gasoline and more conducive to the spirit of South vapor can reduce friction and reduce the waste of state resources, Both sides consider all possible forms of cooperation, not let cooperation has been somewhat embryonic mortality in the bargain among or make exorbitant demands.
 

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Discussion Starter · #7 ·
Thanks Visitant that is a really interesting article.

It does confirm a few suspicions that I had and I think Windy may have had too. The Rover 75 was built on a very high tech production line, some of the robotics in CAB assembly were bespoke and extremely hi-tech. I certainly wondered how SAIC were going to nail the Roewe 750 together and there seems to have been a number of delays bringing the car to market. Perhaps Nanjing's request for more state aid to fund rapid expansion is an opportunity for both companies to reconcile their differences and sort things out. In addition perhaps Nanjing are getting out of Fiat so that should SAIC and Nanjing merge then they will not have too main JV's in place.

Personally I think they should work together. Nanjing and SAIC would achieve a lot more by pooling their R&D teams in the UK as well as their assets and their cash.
 
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