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SAIC Layouts Commercial Vehicles' Self-owned Brands
"Three years from now, Huizhong is expected to be among the top three in China's heavy truck industry as part of SAIC's own brands," said a high-level executive from Shanghai Huizhong Automobile Manufacturing Co., Ltd. recently, speaking to China Business News. "Although we still have a long way to go compared to FAW, Dongfeng, CNHTC, and Foton, we are confident in our future."
Huizhong is not just another player in the commercial vehicle market—it represents an independent brand under SAIC's broader strategy. On December 4th, SAIC announced that it had received approval from the China Securities Regulatory Commission to issue convertible bonds worth up to 6.3 billion yuan, with the controlling shareholder, SAIC Group, pledging to subscribe for at least 800 million yuan. The funds will be used to support the development of self-owned brands, complete vehicle and engine R&D, and the construction of technology centers. This move reflects SAIC’s strong commitment to innovation and its ambition to build a robust commercial vehicle division.
Despite having a new commercial vehicle project—SAIC Iveco Hongyan Commercial Vehicle Co., Ltd.—Huizhong remains a key player in SAIC’s own-brand strategy. At the “2007 Shanghai Huizhong State III Heavy Truck Promotion Conference,†Zhao Xudong, deputy general manager of Huizhong, stated that the company aims to become one of the top three heavy truck manufacturers in China within three years.
The commercial vehicle market is growing faster than the passenger car segment. From January to September this year, national production and sales of commercial vehicles reached 1.89 million and 1.88 million units respectively, up 26% year-on-year. However, for SAIC and Huizhong, the road ahead is still challenging. In 2006, Huizhong sold less than 1,000 heavy trucks and ranked 10th in the industry, while FAW Jiefang, for example, had a much stronger presence with over 458,000 units sold between 2003 and 2006.
Zhao Xudong acknowledged the low starting point but expressed confidence in achieving annual heavy truck production of 20,000 to 30,000 units, thanks to the integration of SAIC’s sister companies like Shanghai Electric, which provides engines.
Looking at the overall strategy, SAIC has been actively expanding its commercial vehicle footprint. In 2006, domestic commercial vehicle sales hit 2.04 million units, with heavy truck sales rising by 31%. While traditional giants like FAW, Dongfeng, and CNHTC dominate, SAIC is leveraging its success in the passenger vehicle sector to strengthen its position in commercial vehicles.
In June, SAIC Iveco Hongyan Commercial Vehicle Co., Ltd. was established in Chongqing, with SAIC holding 67% of the shares. Later this year, SAIC also announced strategic cooperation talks with Nanjing Automobile Group and signed an agreement with Shanghai Electric Group to acquire its stake in Shanghai Diesel Engine Co., Ltd.
According to Qi Xianmin, head of the commercial vehicle division at SAIC, the company's vision is to grow both passenger and commercial vehicle businesses simultaneously through mergers, acquisitions, and internal development. This shift has helped SAIC become a full-range automaker, producing everything from passenger cars to commercial trucks and buses.
While SAIC continues to expand, there are still questions about how it will compete with industry leaders. But with its growing focus on independent brands and technological advancement, the path forward looks promising.