SAIC Iveco Strategic Alliance Upgrading and Strengthening Cooperation

Just half a month after FAW Group and General Motors established light commercial vehicles, SAIC Motor and Iveco signed a new framework agreement to expand cooperation. This means that the competition between FAW and SAIC in the commercial vehicle sector will soon be further upgraded.

It is understood that Nanjing Automotive Wuxi Base is included in both commercial vehicle bases and is only a small part of the new framework agreement. The two parties will also use SAIC Iveco Commercial Vehicle Investment Co., Ltd. (abbreviated as “Shangyi Investment Company”) to integrate commercial applications in China. Car resources to create a complete commercial vehicle business system. It mainly includes three aspects: revitalizing existing assets, establishing a new base, expanding existing product lines, and establishing joint venture technology centers.

Shanghai Automotive is the first domestic passenger car company to produce and sell, but compared with FAW, which belongs to the “Big Three” in China, it appears to be weak in commercial vehicles. However, after the acquisition of Nanjing Auto, in addition to the original Shanghai Huizhong, SAIC Iveco Hongyan, Nanjing Automobile Iveco and Yuejin also included the layout of the SAIC commercial vehicle.

Iveco also places great hopes on the Chinese market. According to Wan Ruyi, general manager of Iveco China, the mission is arduous. His mission to him is that in the next two to three years, Iveco’s sales in the Chinese market will exceed the European market. In the whole of 2008, Iveco sold 211.7 million vehicles in the European market. This sales exceeds Iveco’s current sales in the Chinese market more than twice.

Revitalize stock

The original Nanchang Wuxi base, which was once taken over by the Wuxi municipal government, was the production base of Nanya New Yatu. When Shangnan cooperated, Shanghai Automotive did not take over the base because of its complex equity relationships and heavy debts. In the more than one year after the integration of Shangnan, the Wuxi local government cleared its equity, rationally placed its employees, and gave active policies to expect Shanghai Automotive to take over the base.

SAIC initially had the intention to develop commercial vehicles in Wuxi last year. At that time, SAIC was still considering the introduction of Ssangyong to establish localization of the joint venture company. Therefore, it was prepared to give way to Yizheng Base, and the original Iraqi model of Yisanna produced in Yizheng was put into place. To Wuxi production. However, with Ssangyong entering the rejuvenation process, SAIC lost control of Ssangyong and Ssangyong's domestication of the joint venture company will end. In addition, affected by the global economic recession in the second half of last year, SAIC suspended investment in some projects, and Yizheng Base itself has 50,000-80,000 units of production capacity, which can fully meet the production capacity of the new product of Istana, which makes Xinya in Wuxi. The base is idle.

"An important reason to expand Iveco's cooperation is to use Iveco's strength to revitalize existing stock assets," said SAIC insiders, for SAIC's existing commercial vehicle resources, to "turn waste into treasure."

In the middle of this year, Wan Ruyi, General Manager of Iveco China, once visited Wuxi twice in order to inspect the original Nanqi Xinya Trail Base.

The reporter learned that after the expansion of cooperation with Iveco, a feasible plan for the Wuxi base is still to be used as a production base for Istaner’s new products. Istana is a product of Shanghai Huizhong. The main problem is that the cost is relatively high. Only high-end production and small quantities of production and sales, after expanding cooperation with Iveco, Shanghai Automotive and Iveco plan to introduce Iveco's technology, optimize the cost structure, and create more cost-effective products that are more in line with market demand.

After the joint Iveco collection Wuxi base, Shangyi Investment Company also plans to fully integrate Shanghai Huizhong's business. Shanghai Huizhong’s current commercial vehicle business focuses on heavy trucks and components. The reporter learned that after expanding cooperation with Iveco, Huizhong’s related business is likely to be included in the Shangyi Investment Company. The first step is to integrate the heavy truck portion with the existing business.

Possibility of export platform

As part of the Fiat Group, Iveco designs, manufactures and sells a complete line of light, medium and heavy commercial and off-highway trucks, urban, intercity buses and coaches and other special vehicles. After expanding cooperation with Shanghai Automotive, Iveco and Shanghai Automotive plans to expand the scope of product cooperation from light passenger vehicles and heavy trucks to bring their full range of commercial vehicles to the Chinese market, and to include large and medium-sized passenger cars, special vehicles and core components. All product areas of the Iveco family.

Shangyi Investment Company currently has four bases including Chongqing Hongyan, Nanjing, Yizheng, and Wuxi. Together with Huizhong, which will soon be fully operational, there will be as many as five bases. Among them, two factories in Nanjing manufacture light commercial vehicles and light buses, while in Chongqing they produce heavy trucks. At present, Shangyi Investment Company is positioning each of the bases. The specific plan has not yet been formally determined, but the general principle is that dislocation competition is formed between the various bases, and the advantages are complementary.

After the expansion of cooperation, a very important measure is that the two parties will jointly establish technology centers to engage in the development of related products and respond quickly to user needs in a rapidly changing market.

According to analysis, Iveco has more than 6,000 repair stations in more than 100 countries. This means that once the products of Shangyi Investment Company use these networks to go global, the production bases of both parties in China will likely become a global export platform.