SAIC Manufacturing Fails to Fall Behind Its Own Brand Project

These days, there is no more depressing than SAIC. SAIC Motor Manufacturing Co., Ltd. (Shangqi Automobile Manufacturing) hopes to use Rover and Ssangyong to build its own brand new projects without approval from the NDRC. Some people laughed that this was a bad time for SAIC manufacturing, because just a few days ago, officials from the NDRC just stated that the auto industry is in overcapacity and needs to limit investment.

Untimely

"Before it was because of the similar name, but the name was still not approved by the National Development and Reform Commission." According to informed sources, SAIC Luwei has been renamed SAIC.

On July 28 this year, Shanghai Automotive Co., Ltd. announced that the board of directors has decided that Shanghai Automotive and Shanghai Automotive Group Co., Ltd. will invest a total of RMB 3.68 billion to establish SAIC Luwei Automobile Co., Ltd.

According to sources inside SAIC, the reason why SAIC's own brand projects have not been approved so far is mainly because it is not in SAIC itself but in the macro-climate. For this reason, President Chen Hong of SAIC Motor Co., Ltd. flew to Beijing in recent days to conduct emergency mediation to seek room for recovery. At the end of November, Ma Kai, director of the National Development and Reform Commission, pointed out at the national development and reform work conference that excessive investment has caused the auto industry to be quite passive. At present, the auto industry is building 2.2 million vehicles, and has a total vehicle production capacity of 8 million vehicles and a surplus of 2 million vehicles. Chen Bin, deputy director of the Industrial Development Department of the National Development and Reform Commission, also revealed that in 2005, the market sales volume was 5.5 million, and the entire capacity utilization rate was only 55%.

To this end, the reporter called the National Development and Reform Commission, and the relevant officials were very resolute in their attitude: "Next year we will definitely have to control access to new vehicle production capacity." The official further stated that the determination of whether or not to add new production capacity includes three levels: new construction, offsite Construction and expansion on existing basis. "But the qualification assessment must be linked to whether it is independent research and development."

SAIC determination

It is understood that SAIC has initially established three R&D bases in the development of independent brands: Shanghai General Motors Pan Asia Automotive Technology Center, SAIC Automotive Engineering Research Institute, and its own brand project group under Shanghai Automotive Co., Ltd.

According to the current division of labor, Pan Asia will mainly carry out the improvement and development of the models within the joint venture, and will accept the technical research and development commissioned by SAIC.

The SAIC Automotive Research Institute conducts its own research and development, and is responsible for monitoring new trends in international automotive technology and developing new technologies such as fuel cell vehicles. It is understood that the construction of a new engineering college costing 1.8 billion yuan will begin on December 28 this year.

The independent brand project team is responsible for the digestion and absorption of the imported foreign vehicle technology and the realization of localization. The project team has been responsible for two projects since its establishment: one is Ssangyong in Korea and the other is Rover in the UK. It is reported that SAIC's own brand dealer system has begun to attract investment.

If according to the statement made by an NDRC official that total control does not include self-branded projects, why did the SAIC manufacturing project accident become a "bird of prey?"

For how to define what is an independent brand, the NDRC has shown unusually cautious caution: "How to determine autonomy requires specific study." However, for the NDRC's practice of setting a threshold, an expert who declined to be named agreed: “At present, more than 110 OEMs in China have less than 10,000 units of 90% annual output. This is a serious waste of national resources. The situation of the 'national multinational force, the international licensing' must change!"

Another way

Of course, even if this SAIC manufacturing project is blocked, industry insiders think that it will not affect the real SAIC's own manufacturing plan.

At the Fortune Forum held recently, SAIC President Hu Maoyuan once again proposed four roads for SAIC's own brand R&D. SAIC understands that in 2007, it will complete the goal of 50,000 cars of its own brand. If it does not integrate foreign car resources and purchase technological property rights, it is almost impossible to rely on its own strength alone. However, due to the obstruction of applying for new projects, the strategy for the future may change from long straight to roundabout.

A person familiar with the matter said recently that SAIC’s own brand road may have two development directions if it is hindered by its capacity: First, it will cooperate with Nanjing Auto to use its production capacity; second, it will buy or borrow from its partner's factory. For product production. In the past, there was a saying in the industry that "Shangqi may purchase a workshop at Shanghai Volkswagen Factory and produce its own brand." Shanghai Volkswagen has not directly stated its position.

Even so, companies must consider the current overall policy environment for development. At present, does the company really master the core technology? Is the existing capacity fully utilized? These will become the main considerations for the relevant state departments when setting the entry barrier for the automotive industry.

Therefore, the popular “two-headed” strategy (development and design is one, sales and service is another) will also be strictly controlled. If domestic automobile manufacturers do not pass the threshold set by the policy, it will be difficult for new projects to advance.

View related topics: independent brands, where to go?

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