Chinese auto giant is born
The first major consolidation between Chinese automakers has taken place, as Shanghai Automotive (owned by SAIC) and Nanjing Automobile (owned by Yuejin Motor Group) have now merged.
Shanghai Auto paid $286 million dollars to acquire the vehicle and parts operations of its former rival Nanjing... the largest acquisition ever in China's auto industry.
Though not a world-wide brand, Reuters says that with a stock market value of $24 billion, Shanghai Auto has "financial clout roughly equivalent to Italy's Fiat or Hyundai of South Korea".
Shanghai Auto is China's largest automaker and has joint ventures with General Motors and Volkswagen; the cars they make are the biggest sellers in China. Shanghai Auto also owns a controlling stake in South Korea's SsangYong Motor.
Shanghai Auto sold 1.25 million vehicles in the first 10 months of 2007; Nanjing Auto barely sold 80,000.
China is the fastest growing market in the world with over 35 million cars on the roads but where only 24 out of 1,000 people own one (compared to 500 in Europe). Sales of passenger cars for 2008 are projected to be over 4 million.
The two firms have something in common, though: defunct UK-based auto manufacturer MG Rover.
In 2005, Nanjing bought MG, its tangible assets, and the rights to some big brand names: MG, Morris, Austin and Austin-Healey. They paid $100 million dollars, outbidding Shanghai Auto in the process. Most of the manufacturing equipment was shipped to Nanjing, and reassembled. Nanjing rolled out its first Chinese-made MG sports cars and saloons in April 2007.
But Shanghai owns the intellectual property rights to MG Rover designs (bought for $130 million), with which they produce their Roewe line of cars. Shanghai has already launched the 2.5- liter Roewe 750 (based on the Rover 75) that competes head-to-head with the Toyota's locally-made Camry.
As Reuters reports,
"The next thing we will be focusing on is to clarify the market position of the Roewe and the MG, and differentiate the brands accordingly. That is vital for good sales," said Liu Ningsheng, spokesman at Nanjing Auto.
Related posts:
- China's Nanjing revives MG
- Chinese MGs are for real
- China vs. China over Rover
- Shanghai Auto's Roewe 750 plan
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Tags: Nanjing Auto, Nanjing Automobile, Shanghai Automotive, Shanghai Automotive Industrial Corp, SAIC, SAIC Motor, Roewe, Roewe 750, Rover, automotive, auto industry, automotive industry, China, Chinese auto industry, Chinese automotive industry
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October 2007
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