Shanghai Automotive Industry Corp (SAIC) faces its first big showdown with the fierce unions of its South Korean subsidiary, Ssangyong Motor, with a plan to build a vehicle in the mainland using a Korean engine.
Quoting planning documents, Bloomberg yesterday said SAIC was considering investing US$265 million to build a vehicle based on the luxury Kyron sport-utility vehicle (SUV) that Ssangyong introduced in Seoul in June.
SAIC officials were unavailable for comment.
At a shareholders' meeting last month, chairman Hu Miaoyuan said his company aimed to double production by 2010 to two million vehicles a year, of which 600,000 would carry its own brand. Output this year will be 1.02 million units, including 140,000 produced by Ssangyong.
Korean media reported in September that SAIC and Ssangyong had agreed to set up a 50-50 joint venture in Shanghai that would make SUVs using Korean engines. Output would be 100,000 units a year starting in 2007.
In July, SAIC said it would invest 3.68 billion yuan in a plant in Jiangsu province, 400km from Shanghai, to build passenger cars using Ssangyong and Rover technology and sell them at home and abroad.