SAIC willing to work with Nanjing Auto to reduce competition
Kandy Wong in Shanghai
Shanghai Automotive Industry Corp (SAIC) chairman Hu Maoyuan said the mainland's largest carmaker would be willing to work with rival Nanjing Automotive in order to minimise the competition over the MG Rover brands and technology they acquired.
Mr Hu also said the company would focus on developing hybrids, fuel cells and other new engine technologies by next year in order to boost self-branded sales..
In the heated battle for recognition in an increasingly crowded field, mainland carmakers have been turning overseas for technology and knowhow and boosting their investment in research and development.
Nanjing Automotive outbid SAIC for the asset and brand of the defunct British carmaker MG Rover two years ago, paying Euro67 million (HK$711 million), while SAIC bought MG's car design intellectual property rights for US$97 million.
SAIC in January launched the Roewe 750, its first model based on the British design. Nanjing plans to roll out the MGTF and MG7 in June.
There is concern that, by going head to head, the companies will have to push down prices, limiting any chance for them to turn a profit from the sales.
'Up to this moment, we received 7,000 orders of Roewe 750.' Mr Hu said.
Production target of Roewe for this year is 25,000 units.
To fund the development of self-branded designs, the company plans to use the 19.1 million yuan it raised in December by injecting its car-making joint venture with Volkswagen and General Motors into its A-share-listed vehicle, Shanghai Automotive.
The company did not have plans to raise funds through overseas stock markets, president Chen Hong said.
The company initially planned to raise US$2 billion by listing in Hong Kong in 2004, but pulled back after Beijing introduced austerity measures to curb overcapacity in the industry.
Shanghai Automotive reported net profit of 1.4 billion yuan for last year, up 29 per cent from 2005 and a 377 per cent increase in revenue to 30.5 billion yuan.
'China's automobile market will have fast and robust growth in the next few years. We have to grasp the opportunities provided by the mainland market first,' Mr Chen said.