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South-South Cooperation Boosts China's Automobile Industry
On December 26 last year, the Diaoyutai State Guesthouse in Beijing witnessed a significant event as Hu Maoyuan and Wang Haoliang were jointly held by two "masters," marking the unification of SAIC and Nanjing Automobile Group into one family. This merger has created the largest auto group in China, sparking optimism across various sectors. The reason for this positive outlook lies in the fact that both companies are state-owned enterprises, which brings a strong sense of stability and national strategic importance to the new consortium.
This new entity is expected to reshape the landscape of China’s automobile industry, introducing a powerful force known as "Made in China" on the global stage. The formation of this "Car Carrier" group is anticipated to boost the existing joint ventures' presence among the world's top 500 companies and narrow the gap with global automotive leaders. While challenges remain, the competitive environment will be intense, but the advantages of this merger are clear and promising.
First, the "spell" of sales—redefining the market with annual sales reaching 8 million units. In 2008, China's auto production and sales reached around 8 million vehicles. Dominated by foreign brands like Volkswagen, General Motors, Toyota, and Honda, the market was largely controlled by international players. However, with the combined production capacity of 2 million vehicles annually, this new group is set to restructure the market and create new opportunities for domestic brands.
Second, the "fighting service"—offering services tailored to local conditions, enhancing brand loyalty. In today’s market, selling cars is about selling services. Unlike traditional models where car sales were similar to selling vegetables, modern dealerships must offer professional service and after-sales support. Joint venture brands often follow global standards without special regional policies, whereas self-owned brands can adapt more flexibly. For example, Rongwei introduced a three-year or 80,000 km warranty, surpassing others by up to a year or 40,000 km. Experts estimate this could save buyers around 10,000 yuan, boosting brand popularity significantly.
Third, the "fighting quality"—paving the way for a stronger independent brand image. When people think of Chinese brands, Chery often comes to mind. However, with the Roewe and MG series, Chery has not only strengthened its market position but also improved the overall quality of its products. As domestic brands continue to grow, especially with the South-South cooperation, they are expected to gain more market share and become a "dark horse" in the industry.
Fourth, the "fighting product lines"—expanding product ranges and strengthening competitive foundations. The collaboration with Shangnan has brought commercial vehicles into the mix, including light passenger and truck models from Nanhua Iveco and Yuejin. This complements SAIC’s existing sedan lineup, creating a full range of products that no other domestic company can match. Iveco, in particular, has a wide range of applications—from police and justice to logistics and finance. This broadened reach enhances the customer base and positions the consortium as a formidable player in the market.
In summary, this new alliance aims to establish itself as one of China’s largest, world-class, and globally competitive automobile groups. Industry experts once worried about the overabundance of Chinese auto companies and their inability to stand out. However, this South-South cooperation model has changed that dynamic, reshaping the industry and bringing the dream of a strong Chinese automotive sector closer to reality.