SAIC, Iveco agree to upgrade strategic alliance

(chinatrucks.com, September 29, 2009)Chinese carmaker Shanghai Automotive Industry Corporation (SAIC) and Iveco Motors, a world-known truck, bus, and diesel engine manufacturer in Italia, lately entered into a new framework agreement upon the strategic alliance upgrade.

 
In the near future, both parties will integrate their commercial car resources and create a complete business system through a 50-50 joint venture named SAIC Iveco Commercial Vehicle Investment Co. To be specific, the JV is mainly designed to stimulate the existing commercial vehicle assets, to establish a new base and the technology center, as well as to expand the production lines.

As the passenger car bellwether in China, SAIC cannot catch up with FAW Car Co., Ltd. and Dongfeng Motor Corporation, in terms of the commercial vehicle production.

In order to further sharpen its competitive edge in the commercial car field, SAIC spent CNY 2.095 billion acquiring the Yuejin complete car and related auto parts assets from Nanjing Automobile (Group) Corporation (NAC) at the 2007-end. In addition, the NAC-Iveco JV was transferred to the Shanghai-based automobile giant.

Upon the new framework agreement, SAIC will take over NAC's former commercial vehicle base in Wuxi, Jiangsu Province, east China, for the sake of future production of its new product Istana. Shanghai Huizhong Automobile Manufacture Co., Ltd., which is under the aegis of SAIC, develops this commercial car model.

However, SAIC is confronted with too much cost pressure in course of its current commercial vehicle production, so it expects to unveil more products with higher cost performance and to optimize its cost structure, by virtue of a deeper cooperation with Iveco.

After taking over the Wuxi commercial car base, SAIC Iveco Commercial Vehicle Investment will completely consolidate Shanghai Huizhong Automobile Manufacture's core business in regards to heavy-duty truck and auto parts, said people with the direct knowledge of the matter.

As an arm of the Italian automobile titan Fiat Group, Iveco is responsible for design, production, and distribution of all-series commercial cars and several special vehicles. All of its products will hit the Chinese market in succession through the closer partnership with SAIC, according to the development strategy.

Presently, Iveco is ambitious for further expansion in China and wants to achieve total sales volume higher than that in Europe in the coming two to three years. It is indeed a hard work, because up to 211,700 Iveco-branded vehicles were sold in Europe in 2008, over two times more than total sales in China.

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