Jointly IVECO restructuring Chongqing Hongyan SAIC shares high-end heavy trucks

Of the three major automotive groups in China, SAIC Motor Group has always had obvious weaknesses in the commercial vehicle sector, but this will soon become history.

Joint Working Group has entered Hongyan

Iveco, a subsidiary of the Italian Fiat Group, announced this week that it has entered into a formal joint venture agreement with SAIC Motor Corporation, and that both parties will establish SAIC Iveco Commercial Vehicle Investment Co., Ltd. at a ratio of 50:50. The agreement was approved by the Chinese government and SAIC-Iveco will complete the acquisition of a 67% stake in Chongqing Hongyan Automobile Co., Ltd.

According to the agreement, Chongqing Heavy-duty Truck Group, IAVC Iveco, transferred 67% of Chongqing Hongyan, Chongqing Heavy-duty Truck Group Co., Ltd. will control the remaining 33% of the shares.

Chongqing Hongyan has a long history of localized brands and a certain market advantage in China's heavy-duty vehicle market. Chongqing Hongyan owns two brands of Hongyan and Steyr, and a variety of heavy trucks. The price ranges from 200,000 to 400,000 yuan, which is basically a middle-to-high end product. As early as December 2003, Chongqing Hongyan reached an intentional agreement with Iveco to jointly develop and produce high-end, mid-range and heavy-duty vehicles. However, the uncertainties caused by DeLong's turmoil have deterred IVECO. Under the leadership of the leaders of the Chongqing Municipality, the SAIC Group, eager to make up for the shortcomings of commercial vehicles, was involved.

Yesterday, a middle-level cadre of Chongqing Hongyan revealed that the joint working group of SAIC Iveco has already entered Hongyan, Chongqing. "They have come to more than 30 people and have already been involved in important departments such as production and sales. But now there is only a right of proposal. There is no decision yet." The middle level also revealed that the new company will be listed in the third quarter.

SAIC Makes up for "Complexity" of Commercial Vehicles

Among the three major auto groups, SAIC Motor is the only auto group that focuses on passenger vehicles. The weakness of commercial vehicles undoubtedly imposes constraints on the future development of SAIC Motor. At present, SAIC Motor Corporation has only Shanghai Huizhong and SAIC-GM-Wuling in its commercial vehicle bases, and the commercial vehicle is mainly a low-profit SAIC-GM-Wuling mini vehicle. Therefore, the development of the high-end value chain and the realization of the east-west linkage are the goals of SAIC Motor.

“Commercial vehicles are the highlight of SAIC's “Eleventh Five-Year Plan”. Integration of domestic and foreign resources and linkages between the east and the west are SAIC Motor’s strategies.” SAIC’s public relations officials said yesterday. According to this person, in order to speed up the construction of a new system for commercial vehicles, SAIC Motor Co., Ltd. has clearly defined the strategic layout of “one big and one small”. "One small" means to continue to develop mini vehicles; "big one" means to actively develop heavy vehicles. In the heavy-duty vehicle sector, SAIC will target the Western Development and Eastern Container Lines to quickly expand its production and sales scale in the heavy-duty vehicle sector. This will continue to consolidate the leading position in the passenger vehicle market while achieving a leading edge in the commercial vehicle market. . In the “Eleventh Five-Year Plan”, SAIC expressed that it will realize the combination of mergers and reorganizations and self-development to realize the two-legged walk of passenger cars and commercial vehicles, and plans to build one million automobile production capacity in 2007, including commercial vehicles. It will reach 200,000 units and strive to form a production and sales scale of 45,000 heavy trucks in 2010.

Iveco, who entered China 19 years ago, is also eager to develop heavy trucks. At present, its main product is a light truck product produced by the joint venture Nanjing Iveco. Iveco once said: "Iveco hopes to enter China's engine and heavy truck field as soon as possible." After the reorganization, Chongqing Hongyan will introduce Iveco technology as planned, and launch a new type of mixed loading vehicle equipped with the Iveco cab on the Red Rock chassis. On the one hand, Iveco heavy truck technology will be localized to create a high-end commercial vehicle production platform. The three parties will set up an engine company in Chongqing to produce Iveco's heavy-duty vehicle diesel engines and other engineering supporting machinery. By 2008, there will be two classes of 40,000 vehicles and 30,000 engines.

Heavy truck industry is still in recovery

However, in 2005, the heavy-duty card market suffered the first negative growth in sales in eight years, but it added some variables to SAIC's latecomer commercial vehicle strategy.

A middle-level cadre from Chongqing Hongyan told reporters: “We lost a lot last year. I took 14,000 a year and I have less than 200 pieces of money in two months.” But she also admitted that this year’s situation is better than last year. Something better, "but still at the bottom."

Statistics show that the total sales of domestic heavy trucks in the first five months of the year totaled 127,500 units, an increase of only 0.26% year-on-year. The heavy truck market is still recovering.

According to the research report of China Gold Securities, in the first five months of this year, the Steyr platform has become the protagonist of the heavy-duty truck market. Steyr products represented by Sinotruk, Shaanxi Heavy Duty Truck, Beiqi Foton, Chongqing Hongyan etc. occupy 47.07% market share. In 2006, the main competition in the heavy truck market will begin between China National Heavy Duty Truck Group and Shaanxi Heavy Gas, but the industry competition is not solid. In the next two years, the competitiveness of Beiqi Foton, FAW, Dongfeng and North Benz will also increase, and competition in the heavy truck market will increase. It will also be more intense.

The report believes that the heavy truck market will remain in the adjustment period in 2006. However, the report also pointed out that as China's logistics and transportation is still in its infancy, the proportion of individual transportation is relatively large, so the demand for the heavy truck market will still be dominated by low-cost, fuel-efficient economic products, but the logistics industry will surely move toward the box-type Because of the development of specialized transportation, the high-load, high-efficiency, high-horsepower high-end heavy truck market still has huge growth potential.
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