SAIC Motor Has “No Plans” To Enter North American Market For At Least A Few Years
15
Previously known as Shanghai Automotive Industry Corporation (SAIC), now-renamed SAIC Motor Corporation Limited is one of the “Big Four” Chinese automakers, reporting $54 billion in revenue last year — which makes it the world’s seventh-largest automaker. Currently, the company says it has no plans to build or sell cars in North America for at least several years, according to President of SAIC USA Yi Lu. Coincidentally, SAIC is GM’s partner in the China-based Shanghai-GM joint venture, as well as a participant in another joint venture with GM and Wuling Automotive known as SGMW (Shanghai-GM-Wuling). The news comes on the heels of reports that General Motors will no longer produce the popular Chevy Cruze compact in Korea by 2015, instead electing to move production to plants in China and Europe.
Making his remarks at an auto industry conference about the Chinese market, Lu explained that the purpose of SAIC’s recently-opened U.S. headquarters in Birmingham, Michigan is to grow the company’s reputation in industry circles. The primary role of the office, however, is to assist in the import and export of parts for GM’s Shanghai GM joint venture.
A common theory throughout the global auto industry, however, involves the expectation that Chinese car makers will expand globally and possibly into the U.S. — where the effects of the recession are slowly waning. Currently, the only export market where SAIC sells cars is the U.K. — where the automaker markets vehicles under the storied MG brand that it purchased years ago. Analysts, however, believe that Chinese automakers will enter global markets cautiously — first focusing on regions where products will be most competitive.
There is also a precedent that Chinese OEMs can refer to when it comes to Asian automakers entering the U.S. market — when issues related to quality control were rampant with Japanese and subsequently Korean firms. But SAIC is well-versed in the practice thanks to the experience, know-how, and expertise learned during its joint venture with General Motors.
“These are companies that are well-schooled by the joint-venture partners,” says Bruce Belzowski, assistant research scientist at the University of Michigan Transportation Research Institute. “They understand the risks.”
So as Chinese market growth slows and overcapacity becomes an item of concern, it’s possible that Chinese OEMs will begin exporting excess units to markets outside of China. A WardsAuto forecast expects total vehicle sales in China to grow 5.5 percent in 2012 to 19.5 million units. That’s not a number to take lightly, but it’s nowhere near the double-digit growth seen during the last several years.
As of this writing, GM and SAIC are partners in Shanghai-GM and SGMW joint ventures. SAIC also has a similar partnership with Volkswagen, called Shanghai Volkswagen, as it does with General Motors, as well as two other ventures with Iveco-Hongyan and Pengpu. Individual brands marketed by SAIC include Roewe, MG (Morris Garages), Sunwin, Naveco, and Maxus.
The GM Authority Take
The Chinese aren’t coming just yet… but everyone knows they are — eventually. Ironically for GM, its partnership with SAIC Motor is a double-edged sword wherein GM and SAIC are both partners, and competitors: on the one hand, GM is able to sell its cars in China (including Chevrolet, Buick, Cadillac, and Baojun) thanks to the joint venture with SAIC, since the Chinese government requires that non-Chinese firms partner with a local automaker to sell cars in the country. On the other, SAIC gained an invaluable amount of know-how, information, and intelligence from GM in a very short period of time — a circumstance that may put The General at a disadvantage in the long run.
So perhaps it’s time the U.S. thinks about putting Chinese automakers — when they do decide to start selling their (currently-inferior) vehicles here — at a similar disadvantage…
Hat tip to T. Bejma.
Google+
If SAIC has entered the US Car Market, it would create another GM flop much in the same manner when GM were closely affiliated with both Isuzu and Suzuki in which the latter had already decided to leave the US Car Market due to Bankruptcy.
GM has established a firm foothold in a country that will eventually cut it off.
Not thinkin Chinese cars and whoever they’re associated with will sell very well at all….
Do not make the mistake of thinking the China imported vehicles will be low quality junk. The Chinese are very capable of designing and manufacturing great product.
As US consumers we get what we pay for. We are happy to spend $2 on a cap gun that burns up the first time we use it. We just think, I only paid $2. That is the cheap side of the stuff we buy. We just do not demand quality because we see the $ sign and expect it.
Then there is the good stuff. I buy on ebay very reasonably priced radio control equipment for electric boats. No middle man here in the US. The Chinese guy ships them directly to me air freight for a couple bucks for shipping and ~$7 bucks for the receiver. Same exact thing here would cost me $15. Huge markup in some US retailers pocket. And the parts are very decent quality.
The vehicles they build with GM/VW/Ford in China are made with very similar parts suppliers if not the same. Lots of parts in US made vehicles are imported from China. Like the Japanese in the Deming days they have taken on quality control procedures where they are demanded by the consumer.
When a quality manufacturer like SAIC starts exporting they will be top notch products. They are not Chery.
What I hope is that they work with their partners like VW, GM, Ford and not kick them out of their country and go alone. But we are the US and we will buy from anyone if we can get it cheaper and it will be cheaper with their LOW wages.
Im just saying that most Americans do not have good opinions of Chinese products. Even though most of our products are made in China, people wouldn’t knowingly pay for something made 100% in China, especially if there are better, less expensive choices. Chinese goods rival American, therefore, they are seen as enemies/competitors.
First part is very true. However the issue that gets people to do their shopping at Walmart is the price. And if they do shop at Bed, Bath and Beyond they pay a bunch more for the same product that was still made in China but perhaps is a bit higher quality.
In the past it was Japanese cars, now it is Korean (Hyundai/Kia). In few years it will be Chinese.
Being made (as in assembled) in China is one thing… being conceived, designed, engineered, and quality-tested is quite the opposite. It seems that the Chinese — currently — can do the former quite well, but are still way behind on the latter.
That may be true but the article discusses export of vehicles, not just ones with Chinese names on them. We do not buy dong feng basketball shoes made in China, we buy Nike shoes made in China.
They already build and export Mercedes E class to South America. Chinese BMW 5 series are also exported. Chinese built Fits are exported to Europe and Canada. The Chevrolet Sail is sent to Chile. Peugeot cars are exported to Egypt. So it is just a matter of time before a non Chinese OEM nameplate is sold here. They need to keep their plants running and Chinese sales are not expanding as fast as they used to.
They export Chinese named inexpensive vehicles to developing nations and I do not see a market here for really cheap Chinese vehicles.
With the latest anti Japanese issues in China they may just export all those unwanted Toyotas and Hondas.
At this time all Jeeps are built here in NA and shipped all over the world. China will be building Jeep vehicles soon. These will be exported to other countries.
Chrysler’s move to make Jeeps in China for China is simply a matter of addressing a competitive disadvantage, since local production is pretty much a prerequisite for automakers that want to profitably compete in China. Due to high tariffs on imported vehicles, importing into China is not an option for most — as no automaker wants to price itself out of the market — as Cadillac has done with all of its cars except for Chinese-market and Chinese-made SLS:
http://gmauthority.com/blog/2012/04/why-is-cadillac-selling-slower-than-molasses-in-china-and-what-is-gm-doing-about-it/
That’s why GM will soon begin building Caddys in China for China:
http://gmauthority.com/blog/2012/09/cadillac-ats-to-begin-chinese-production-in-2013/
If it decides to use China as an export base to surrounding markets, I see no problem with that. It’s a plant, after all, with a significant amount of funds invested into the facility. There’s also Europe and Russia that can serve as manufacturing bases.
Exporting to South America from China is an interesting proposition; I’m sure that demand for luxury cars isn’t as great in SA as it is in Europe, North America, or China… so perhaps it doesn’t make sense (yet) to build luxury cars in South America. This would explain MBZ’s exporting of the E from China to SA. However, the volume and demand most definitely exist for non-luxury vehicles — and those are, by a large margin, being assembled locally in SA.
Ultimately, though, I don’t know if consumers are as concerned about country of origin/manufacture as we think, so long as the product (or brand) attributes fall in line with market demand. Of course there are those that will go out of their way to not buy a (for instance) Chinese-made item in the U.S. But in an environment when most are running plants around the world to meet demand faster and more cost-effectively (and Mercedes are being built in the States), it’s the value proposition of the product that counts, not the country of origin/assembly.
I think the majority forget (Don’t know) that the MGs (and Roewes) are almost entirely designed and engineered at the old MG longbridge site in Birmingham, England……
Not in China..
They’re also assembled in England for the UK (CKD tho I think).
Jason Plato is also 2nd in a MG in BTCC, MG have basically replaceced Vauxhall/GM in it.
All good points Dave. Ironically, SAIC bought into the “more or less competitive” automotive space with MG, just as Geely did with Volvo. How long until the concepts (engineering, design, etc.) from the world-class cars get applied to Chinese brands?
Does that make Opel extremely less competitive then? Considering MG and Volvo actually make a profit.
Plus I think the design of MGs and Volvos are better than some bland VWs and Audis. The Opel Agila, Antara, Combo and Zafira Family are truly awful looking.
As far as engineering goes, Volvo are the leaders in safety and MG Rovers werent bad.
I imagine if Vauxhall engineering and design had been kept, instead of Opel, the company would be in a much better place now. Rather than keeping less efficient German plants open and shutting the more efficient foreign ones. German workers/unions demanding wage rises of 4-6% when foreign ones are accepting wage cuts and flexible working.
GM is in over their head on this one and just don’t seem to be able to manage a foreign division sensibly.
The difference is that Volvo is a luxury player. Opel is not, although it could be if it were aligned globally with Buick.
Opels are also best-in-class in so many categories… Volvos and MGs? Not so much. In addition, while Opels are mainly engineered in Germany, they are also co-developed all over the world thanks to GM’s global R&D/E&D resources. What about Vauxhall engineering now?
BEIJING—General Motors Co. has agreed with its main Chinese partner to restructure their joint venture and give the American automaker an equal stake.
See this:
http://gmauthority.com/blog/2012/04/gm-gains-stake-in-chinese-saic-partnership-now-split-50-50/