Can SAIC NAC Set off a New Round of Reshuffle in China's Auto Industry?

Experts from the China Automotive Technology and Research Center believe that the final reorganization result of the Chinese auto industry is the formation of several large-scale enterprise groups with large production scale, strong technical development capabilities, product serialization, and reasonable division of labor and cooperation, and formed control of a few enterprise groups. Most of the country's auto market situation.

SAIC Group and Nanjing Yuejin Group recently signed a letter of intent for cooperation, announcing that both parties will “comprehensively cooperate”. According to industry sources, this letter of intent is actually the first step for SAIC and NAC to “fully integrate”. Authorities in the industry believe that the cooperation between SAIC and NAC's two large-scale state-owned auto companies is another milestone in the merger and restructuring of China's auto industry, marking the beginning of another round of major reshuffling in the auto industry, which will further improve the Chinese auto industry. The degree of concentration will eventually change the pattern of the current fragmented, chaotic, and poor Chinese auto industry.

At present, there are more than 130 auto vehicle companies in China, and the number of them is among the highest in the world. According to statistics from the China Association of Automobile Manufacturers, sales of the top ten auto companies in 2006 accounted for more than 84% of the total. The remaining 120 vehicle manufacturers have a total sales volume of less than 1.2 million vehicles. The vast majority of auto manufacturers have annual sales of less than 10,000 vehicles, and at least dozens of vehicles.

The automotive industry is a very significant industry with economies of scale. Over 100 years after the birth of the world’s auto industry, the tide of reorganization has been surging. From the early days of the free competition of thousands of companies around the world, only a few companies’ oligopolies remain. In 2006, the world’s automobile production exceeded 50 million vehicles, mainly in the hands of GM, Toyota, Ford, Volkswagen, Daimler-Chrysler, Renault-Nissan, Peugeot-Citroen, Honda, BMW’s nine auto companies and Hyundai Motor. Of the 10 companies, the top three accounted for nearly half of global vehicle production. In 2006, GM's global sales reached 9.09 million units, Toyota's 8.8 million units, and Ford's approximately 8 million units (including Mazda's). Any one of the company's sales exceeded China's full-year sales last year.

In recent years, mergers and reorganizations of the Chinese auto industry have also been very active, such as cooperation between FAW and Tianqi, and cooperation between Changan and Jiangling. Among the top ten auto companies in China, except that Geely Automobile is a private enterprise, the rest are state-owned enterprises, and it is not a big problem to say that restructuring is a problem. However, FAW and Dongfeng belong to the enterprises directly under the Central Government and are controlled by the State-owned Assets Supervision and Administration Commission of the State Council. Changan Automobile belongs to the China Ordnance Equipment Group Corporation and is also indirectly affiliated with the SAC. SAIC, BAIC, GAC, and Chery are all local state-owned enterprises, which are under the jurisdiction of the local SASAC. The auto industry is a high-investment, high-profit-tax industry that is closely linked to local GDP and taxation. No one wants to be merged with other provincial companies.

Both SAIC and Nanqi are local state-owned enterprises. At the beginning, the two companies respectively acquired Rover in the UK, SAIC bought software, and NAC bought hardware. SAIC developed its own branded car, Roewe, on the Rover 750 platform. Nanqi directly copied the MG. The Rover 25, 75 series and Nanqi MG MG series products purchased by SAIC are products on a technology platform, and competition between the two in the domestic market is unavoidable. However, the fierce competition between the two sides, the voice of cooperation has not been broken. Wang Haoliang, chairman of Nanjing Auto, has been saying for two years that Nanjing Automobile is willing to cooperate with any opponent. After the Shanghai Auto Show, the high-level trains of Nanjing Automotive Industry Corporation once visited SAIC Motor twice. In mid-July, SAIC executives visited Nanjing. On the evening of July 27, both parties signed a letter of intent for cooperation.

Zhang Guobao, deputy director of the National Development and Reform Commission, recently stated that the Chinese auto industry needs rational development. While avoiding overheating investment, the government supports and promotes mergers and acquisitions among auto companies. The cooperation between SAIC and Nanjing Auto was strongly supported and promoted by the governments of Shanghai and Jiangsu Province. This kind of cooperation is conducive to the integration of the resources of both parties and the acceleration of independent capacity building; it will help reduce the investment in fixed assets and increase the efficiency of asset utilization; it will help optimize the allocation of resources of both companies and achieve synergies in R&D, procurement, production, and sales. It is conducive to enriching the product structure and enhancing the value of independent brands so as to achieve a win-win situation.

Experts from the China Automotive Technology and Research Center believe that the final reorganization result of the Chinese auto industry is the formation of several large-scale enterprise groups with large production scale, strong technical development capabilities, product serialization, and reasonable division of labor and cooperation, and formed control of a few enterprise groups. Most of the country's auto market situation. Taking into account the uneven economic development in China and the diversity and complexity of the domestic market demand structure, some companies that use product differentiation as their main competitive strategy will still have a certain amount of room for development.
View related topics: SAIC commercial vehicle expansion

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