The oldest two state-owned automobile enterprises in China still come together.
At 5 pm on December 26th, Shanghai Automobile Group (Shangqi Automobile) and Nanjing Automobile Group (Nanjing Automobile)’s controlling party Yuejin Automobile Group formally signed a comprehensive cooperation agreement. The largest auto company merger and acquisition case so far in China has settled. .
After full integration, SAIC will become a car carrier with international competitiveness, and the veteran state-owned company NAC is also expected to be reborn. It is reported that under the promotion of the National Development and Reform Commission, "Southern Cooperation" will become a classic sample of the "big grouping" project of the Chinese automobile industry.
SAIC merged into SAIC
According to the agreement, the Yuejin Group's automotive business, that is, Nanhua's business, is fully integrated into SAIC's flagship. Among them, the entire fleet of Nanjing Automobile, including Iveco Yuejin, MG Grandeur, Nanjing Fiat, Mage UK Base, Wuxi Xinyatu and Ningbo Iveco Bridge Co., Ltd. (Ningbo Qianqiao), Nanqi Special Vehicle Co., Ltd. (special vehicle), and closely-knit parts assets will enter SAIC Motor’s holding Shanghai Automotive; other parts and service trade assets will enter the joint venture between SAIC and Yuejin. Hua company.
In exchange, Shanghai Automotive will invest 2.095 billion yuan to purchase leap-forward vehicles and tight parts assets; in addition, through the partial equity transfer, Yuejin will hold 320 million shares of Shanghai Automotive and 25% of Donghua. After the transaction is completed, Yuejin Automotive Investment Company (temporary name) will become the second largest shareholder of Shanghai Automotive, holding no more than 5% of the shares, while SAIC remains the largest shareholder of SAIC Motor. In the future, Yuejin Automobile Investment Co., Ltd. will not participate in the operation of the Nanjing Automobile Group, and its revenue will come from the dividend of Shanghai Automotive.
Due to the fact that it is related to the largest listed automobile company in China, Hu Maoyuan, chairman of SAIC, stated that although Nanjing Automobile's entire vehicle and tight parts assets needed to be integrated, the initial impact on SAIC Motor’s earnings was not significant. He said that the proportion of assets injected by Nanjing Automobile is relatively small, less than 5% of Shanghai Automotive Assets, so the impact is temporary.
SAIC Industry Chain Completed
"Shangnan Cooperation" began on April 19 this year. On the day before the Shanghai Auto Show, Hu Maoyuan, chairman of SAIC Motor, responded to the “Leung Tzu†that was formed in the 2005 bid for the British Mover’s Rover and stated that he “had the same roots and was in a hurryâ€. And hope for full cooperation. And on the signing date, the two sides even smiled and hatred.
In the face of future development, Wang Haoliang, chairman of the Nanjing Automobile Group, stated that “this (merger) result has passed the national economic development strategy of the Yangtze River Delta enterprise and the national automobile industry development policy, which is a very important opportunity for the development of Nanjing Auto.â€
Hu Maoyuan, chairman of SAIC, said that the alliance can break the shackles of regional development thinking and realize the flow of production factors across regions. According to the preliminary plan agreed by both parties, both will complement each other in terms of capital, R&D, marketing, manufacturing, and procurement, and share resources; they will play a synergistic role in vehicles, parts, and domestic and international businesses.
It is reported that in the full integration, Roewe and MG two independent brands will be the top priority. “Shangqi will implement a dual-brand strategy, and Roewe and MG will continue to coexist for a long time.†Chen Hong, president of Shanghai Automotive Co., Ltd., pointed out that Roewe and MG will be differentiated in the future, in which Roewe will be positioned as a gentleman. Nanqi MG MG will mainly produce high value-added sports car series.
At the same time, SAIC will use MG's production base in the UK to explore the international market and use it as a window to Europe. This year, SAIC and Nanjing Automobile respectively launched the Roewe 750 and the MG 7 Series products. According to the original plan, SAIC must at least invest 6 billion yuan to ensure the subsequent development of MG.
In addition to its own brand, Hu Maoyuan stated that after SAIC and NAC have fully cooperated, SAIC's shortcomings in the commercial vehicle sector will be fully compensated. At present, SAIC's commercial vehicle production companies include Shanghai Huizhong, Shanghai Shenwo and Shanghai Iveco Hongyan. However, heavy trucks and heavy trucks are still very weak. SAIC's commercial vehicle segment will be fully improved, and it will also increase its strength against FAW and Dongfeng commercial vehicles. But more importantly, through the merger of Nanjing Automobile, the long-awaited national expansion of SAIC will slowly open.
"Group strategy"
As the two state-owned automobile enterprises with long history, Nanjing Automobile has just finished its 60th birthday and SAIC has already passed half a century. In 2006, SAIC took a slight advantage over FAW ranks first among domestic auto makers.
According to the current situation analysis, the SAIC Group's production and sales this year will likely reach 1.5 million, ranking first in the country. At present, the annual production and sales volume of SAIC Motor is about 200,000. Industry insiders expect that after the full cooperation, the SADC will become the largest automobile group with the largest assets, the most complete range of business and the most abundant products, and the annual output will likely hit 2 million vehicles.
Analysts believe that this cooperation is not only the merger and reorganization between the two companies, but also the first reorganization and integration of cross-regional state-owned enterprises in the Yangtze River Delta. Therefore, the government plays a key role in the back.
In this regard, the attitude of the National Development and Reform Commission is clear. During the “Eleventh Five-Year Plan†period, through mergers and reorganizations, the state will focus on cultivating 1 to 2 large-scale automobile groups with an annual output of more than 2 million vehicles, forming a number of annual production capacity of 100 10,000 key auto companies.
Under the model effect, the National Development and Reform Commission's "big grouping" strategy will undoubtedly accelerate implementation. Recently, the cooperation between Dongfeng and Hafei has surfaced and it is expected to become a member of the next big group camp. (This article Source: China Sankei Shimbun)
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