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SAIC to build its own cars, competing with partners
30th November, 2007
SAIC Motor, China's largest automaker, will increase spending to make cars of its own design, heightening competition with its partners, General Motors and Volkswagen.
The company will spend at least 20 billion yuan, or $2.7 billion, to develop between 20 and 30 new models by 2012, President Chen Hong said at a news conference in Shanghai on Thursday. That compares with an earlier plan to spend 13.7 billion yuan by 2010.
SAIC Motor is moving up from being a low-wage assembler of overseas brands and is developing five platforms, ranging from recreational vehicles to compact cars. The carmaker has purchased technology from the U.K. and South Korea to help with its own designs.
"It will take SAIC three to five years to build its own brand and catch up with overseas rivals," said Wang Liusheng, an analyst at China Merchants Securities in Shenzhen.
"SAIC Motor has a competitive edge over its overseas rivals with lower costs in parts purchasing."
SAIC Motor rose 3.7 percent to 24.39 yuan as of 2 p.m. in Shanghai. The shares have almost tripled this year.
Car sales in China surged 24 percent to 7.15 million in the first 10 months of 2007 because of economic growth. The benchmark CSI 300 Index has more than doubled this year, fueling demand as more than three-fifths of Chinese stock-market investors buy new cars with their profits.
"China has become the most important market for all carmakers," said Wang. "SAIC has great potential to develop in its own country."
The carmaker expects group sales of more than 200 billion yuan this year, Chen said.
The company is spending about 8 percent of sales on research and development.
The automaker expects to sell a total of 600,000 own-brand vehicles by 2010, including Roewe sedans.
SAIC Motor's parent is also in talks about a possible tieup with Nanjing Automobile Group, the Chinese maker of MG cars, to expand its own-brand lineup.
"M&A is something you grasp when opportunities arise," said Chen. "We'll continue to closely monitor market situations in China as well as overseas."
The two bestselling models in China in the first 10 months were the Volkswagen Jetta, made by FAW-Volkswagen Automotive, and the Volkswagen Santana, made by a venture with SAIC Motor.
SAIC makes Santana, Passat, Golf and Polo cars with Volkswagen. The Chinese company also makes Excelle, Regal, Sail, Chevrolet Epica and Aveo models at Shanghai General Motors.
Shanghai-based SAIC owns 51 percent of South Korea's Ssangyong Motor. It paid $116 million for the design rights of MG Rover Group's Rover 25 and 75 cars in 2005.
Ssangyong also cut its full-year sales target to 140,000 vehicles from 153,500 vehicles.
Release link:
http://www.iht.com
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