Bloomberg News
SAIC Motor Corp. (600104), the Chinese manufacturing partner of General Motors Co. and Volkswagen AG, pledged to increase spending to build up its own car brands after sales barely rose in the first five months.
The Shanghai-based automaker faces a shortage of talent and lacks innovation, Chairman Chen Hong said yesterday in the city, asking shareholders for patience with the progress. He was speaking at his first annual meeting since assuming the post last month. Besides building Buicks and Chevrolets for GM, SAIC also owns the MG and Roewe marques and manufactures Wuling minivans in a three-way venture with GM.
Chen’s comments underline how China’s state-owned automakers have lagged behind in developing their own brands even as they earn the bulk of the profits through their manufacturing joint ventures with foreign carmakers. The reliance on overseas brands led a former minister in 2012 to call the Sino-foreign joint venture model as addictive like opium, according to a Xinhua News Agency report.
SAIC Motor’s own-brand deliveries rose 0.1 per cent in the first five months to 85,155 units, compared with the 7.4 per cent gain for its car venture with GM.
Chinese brands accounted for 21.5 per cent of industry car sales last month, a decline of 5.1 percentage points from a year earlier, according to the data. German marques led with 28.7 per cent of the market, followed by the Chinese, Japanese, American, Korean and French nameplates.
SAIC Motor will place ‘utmost importance” on developing electric cars and aims to cut their costs, Chen said. The automaker is considering opening a venture capital unit in Silicon Valley, he said
He owned an 06/06 MG TF 135 and then a 15/64 MG3 Style for much of the time he has been associated with AROnline - more recently, though, he has re-kindled a long-standing Alfa Romeo affair with an 18/68 Giulia Veloce 280...
Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing and other projects, but remains active behind the scenes sub-editing content on a regular basis.
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It’s odd that China, which produces so many consumer goods, including the laptop I’m on now, hasn’t made a major assault on Western markets with their cars. I’m sure a tie up with a Western manufacturer could make them a big player.
Glenn I think one problem with the Chinese cars, particularly MG, is that there is a big cash risk with buying what is effectively the unknown – for something that isn’t really that cheap to buy (compatively or in real terms). For me and many others that might be tempted, is that would I buy an MG, or would I instead buy something that has a known good reputation second hand. The laptop is a different kettle of fish, where you might buy a reputable brand eg HP or Toshiba (made in China) and if packs up, you take it back to the shop and get it replaced. worst case -you loose a grand or two. If you buy an unknown car brand, then the perception is that you could be buying 15000 pounds of problems. I think (this is my opinion) is that MG should have priced the MG6 really low in price, just to buy a segment of the market, then put the prices up. They may have lost more money initially, but made q quicker recovery (if the cars gained good reputation). ON the other hand – perhaps they didn’t care if hey didn’t sell many. then of course there are the LHD markets…the diesel and the automatic and the station wagon which they haven’t done (and you would think that the wagon atleast…would be trivial)…alex
Your comment about buying into the ‘unknown’ likely hits the nail on the head as one of numerous explanations as to why MG sales have not taken off in the manner many enthusiasts and observers were expecting. It would suggest that buyers’ certainty to purchase a major expenditure item such as a car goes beyond simply the perceptions of the brand itself. Of course, MG Motor UK Ltd is starting to get across the message about the design and engineering element of the new MGs being undertaken in Longbridge, although at the moment this is not enough persuasion to override the ‘unknown’ of China where the cars are built.
For an ‘unknown’ brand such as Roewe, should it ever go on sale outside of China, this would be an even bigger task because it lacks the brand recognition that MG has to help it sell. Then again, how many owners of Audis, BMWs and Mercedes Benz models still believe their car was made in Germany? How would they react if these companies ever started building some of their more affordable offerings in China and then selling them to the rest of the world? I think the strength of the brand and its associated perceptions would be a major part in overcoming this. An interesting thought.
David you are right about BMW and where the cars are built….but if you had a problem with a BMW – I expect it would be fixed without delay (no doubt there will be stories to the contrary but on the whole the brand, quality and durability is a known thing with mainstream BMW, Jaguar, Toyota, Nissan etc. my main pt is that the MG is not particularly cheap so it has no real advantage against a “known thing”. if I were cheaper – it would have an advantage alex