SAIC Says It Will Produce 2 Million Vehicles by 2010

The Volkswagen Magotan – China’s version of the Passat
Shanghai Auto sees growth in China and abroad

By Brendan Moore

10.16.2007

The things you learn by perusing news reports about Communist Party meetings in China:

Shanghai Automotive (SAIC) chairman Hu Maoyuan, told Communist Party bosses in Beijing earlier today that the company is on track to produce two million vehicles by 2010 calendar year. The projected two million total includes the vehicles they make for GM and VW through joint ventures, as well as their own fledgling brand. Regarding their own brand, Hu said that production of 600,000 units under that brand by 2010 is “expected”. Hu also stated that he expects $5 billion USD in trade and export revenue by 2010.

SAIC is tracking towards production of over 1.5 million vehicles by end of 2007 calendar year.

“We want to use China’s low costs to develop a global brand,” Hu said, according to Reuters. He added: “We need non-stop opening and participation in the international sector to be a top car-producing nation. China’s auto sector hasn’t reached that level yet.”

But, obviously, SAIC and China’s other auto makers have every intention of realizing that goal, and if their exports are successful overseas in markets like North America and/or Europe, then that means someone else has to lose sales. There is already production over-capacity in those markets, so this is a zero-sum game. Any sales made by Chinese car companies in North America or Europe subtracts a sale from an established competitor already there, whether that sale is deducted from an American, Japanese, German, Korean, Italian, etc., producer.

So, the hyper-competitive landscape in those markets will become even more so in the next several years.

Car production in China is growing so rapidly that it is set to overtake the US within a decade as the world’s largest market, and multinationals are flooding in to invest. Paradoxically, they are investing in partnerships that will be used as springboards into their home markets. The Communist Party and the Chinese government (which are many times one and the same) are sponsoring the peculiar form of ultra-capitalism and export growth by China’s industrial companies and so far it has proved to be an effective means of economic growth.

Surprisingly, Hu also mentioned that SAIC will have almost two dozen EV and hybrid concept vehicles ready for the Olympics next year. Whether this is for the PR value of such cars, or signals their intent to compete in this segment is unknown.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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3 Comments

  1. Zero-sum game is right, and the Chinese aim to have us holding the zero at the end of the game.

  2. Amybe the UAW can organize the Chinese auto workers. That should slow down their profit-making machine.

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