In recent days, the automotive industry has witnessed a rather disheartening development involving SAIC. SAIC Motor Manufacturing Co., Ltd. attempted to launch its own brand projects using Rover and Ssangyong without the approval of the National Development and Reform Commission (NDRC). This move has sparked criticism, with some joking that it's a tough time for SAIC manufacturing. Just days earlier, NDRC officials had warned that the auto industry is suffering from overcapacity and urged restrictions on new investments.
The timing couldn’t have been worse. “It was initially due to the similar name, but even then, the name wasn’t approved by the NDRC,†an insider revealed. According to sources, SAIC Luwei was recently renamed to SAIC, signaling a strategic shift.
On July 28, Shanghai Automotive Co., Ltd. announced that it would invest RMB 3.68 billion to establish SAIC Luwei Automobile Co., Ltd. in collaboration with another entity. However, despite these efforts, SAIC’s own brand initiatives remain stalled. According to internal sources, the delay isn't due to internal issues but rather the broader economic climate. In response, Chen Hong, president of SAIC Motor, recently traveled to Beijing to negotiate and seek support for the project.
At the end of November, Ma Kai, director of the NDRC, emphasized during a national development conference that excessive investment has led to a difficult situation in the auto industry. With current production capacity at 8 million vehicles and only 5.5 million sold in 2005, the utilization rate was just 55%. The NDRC is now determined to control new vehicle production capacity next year, considering three types of expansion: new construction, offsite building, and existing facility expansion. Importantly, these projects will be evaluated based on whether they involve independent research and development.
SAIC has made significant strides in developing its own brands, establishing three key R&D centers: the Pan Asia Automotive Technology Center, the SAIC Automotive Engineering Research Institute, and the independent brand project team under Shanghai Automotive Co., Ltd. While Pan Asia focuses on joint venture model improvements and technical R&D, the SAIC Research Institute is dedicated to exploring new technologies like fuel cell vehicles. A new engineering college costing 1.8 billion yuan is set to begin construction on December 28.
Meanwhile, the independent brand project team works on absorbing foreign technology and localizing it. It has already taken on two major projects: Ssangyong from South Korea and Rover from the UK. SAIC’s own brand dealer system is also attracting investment.
Despite the NDRC’s claim that self-branded projects are not included in total control, the SAIC project still faced obstacles. The NDRC remains cautious about defining what constitutes an independent brand, stating that it requires further study. An unnamed expert criticized the current state of the industry, noting that over 110 OEMs in China operate below 10,000 units annually, leading to massive resource waste.
Industry insiders believe that even if this project is blocked, it won’t derail SAIC’s long-term plans. At a recent Fortune Forum, SAIC President Hu Maoyuan outlined four paths for the company’s own brand development. SAIC aims to produce 50,000 of its own brand cars by 2007, which may require partnerships or technology purchases. If new projects face delays, the strategy might shift from direct expansion to more indirect methods.
One possibility is collaborating with Nanjing Auto to use its production facilities, or acquiring or borrowing space from partners. There have even been rumors that SAIC might purchase a workshop at Shanghai Volkswagen. While Shanghai Volkswagen hasn’t commented directly, the idea highlights the need for flexibility.
Ultimately, companies must adapt to the current policy environment. Are they truly mastering core technologies? Is their existing capacity being fully utilized? These factors will shape how the NDRC sets entry barriers for the industry. As a result, the popular “two-headed†strategy—separating design and sales—will also face stricter oversight.
If domestic automakers fail to meet the policy thresholds, new projects will struggle to move forward. The road ahead for SAIC and others in the industry is complex, requiring both innovation and adaptation to evolving regulations.
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