Chinese cars: why you need to know about SAIC

Wednesday, 24 April 2019

SAIC is a brand you might have seen on the odd vehicle in New Zealand. Or it might just be the biggest automotive brand you've never heard of.

For the last decade or more, many of the big Chinese makers have been working with more of a focus on expansion outside the domestic market; so we're going to be hearing a lot more about them in the decade to come.

Shanghai Automotive Industry Corporation (SAIC) is the largest automotive group in China, with 7.05 million sales and a 24.1 per cent market share in its home market last year.

Aquisition of MG in 2007 kickstarted SAIC's plan to develop 'own brand' vehicles.

In 2018, the Chinese new-vehicle market experienced its first decline in 28 years, and even dropped double digits in the fourth quarter. But SAIC still grew 1.75 per cent. It's number 36 in the Fortune Global 500 and the seventh-ranked car company.

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SAIC (feel free to pronounce it 'Say-IC' like company people do) is also 100 per cent owned by the Chinese government, which partly explains its rapid rise to prominence.

It can trace its origins back to the 1940s, but the real beginnings of the company as we know it today lie in a joint venture with Volkswagen.

EVs are a pillar of SAIC's future model plans. It wants to sell 600,000 of them next year.

In 1984, SAIC-VW started building versions of the German maker's cars specifically for China, which in turn allowed SAIC to build an entire supply chain of its own. Today, SAIC is also China's largest component company.

Next came a joint venture with GM, in 1998.

Left to right: MG6, MG eZS, Roewe Marvel X, MG RX8, MG HS and MG5.

Today, there are eight major automotive groups within SAIC, including ventures with GM-Wuling (a separate brand to SAIC-GM) and Iveco.

One of the most significant developments in recent times is the move by SAIC to establish its own car brands. This division is called SAIC Motor Passenger Vehicles (SMPV).

The purchase of a controlling share in Korean SUV maker SsangYong in 2004 went badly; the company was placed into receivership in 2009. Some say the Korean government squeezed SAIC out; others say the Chinese group pocketed quite a bit of the Mercedes-Benz licensed technology SsangYong was using at the time before it all went south.

Whatever the case, it's all over now and today SsangYong is owned by Indian conglomerate Mahindra.

Let's try again. Through a slightly convoluted process, SAIC acquired MG Rover in 2007. It was initially outbid by a company called Nanjing, but SAIC then did what any self-respecting corporate giant would do: it purchased Nanjing and got what it wanted anyway.

SAIC secured the company and products, but only the 'MG' name; the Rover brand was and is retained by Land Rover (now owned by India's Tata).

It started producing MG vehicles in 2007 and at the same time launched a more luxury-oriented brand using Rover technology, called Roewe. You can see what they did there.

It also acquired another British institution, the LDV light-commercial company, in 2011. These vans (also now a ute and SUV) are sold under the Maxus brand in China, but retain the LDV badge for Australia and NZ.

MG, Roewe (pronounced 'Roewey') and Maxus/LDV are now moving far beyond their roots into new platforms and technology.

SAIC has research and development centres in the United Kingdom and California. There are five major manufacturing bases: four in China and one in Rayong, Thailand (which is also a hub for right-hand drive production).

Of the seven-million-plus vehicles sold by SAIC in 2018, 827,800 were from these 'self-owned' brands. Overseas sales totalled 277,000.

Expect both numbers to grow significantly in the years to come, although it's a large company playing a long game. SAIC has an immediate goal of reaching 10,000 sales per year in key new markets (Australia/NZ is one of them).

Chinese makers are also adopting much shorter model cycles than is typical in the global motor industry, in order to advance more quickly: four to five years instead of the usual seven to eight.

SAIC says its key areas of development in the future are electrification, car sharing, connectivity… and globalisation.

The company's EV sales of 140,000 in 2018 were up 120 per cent on the previous year and the company has a stated aim of reaching 600,000 by 2020. It has already built over 50,000 charging stations in China.

SAIC is also the only Asian company in the 5G Automotive Association, so it's a key player in the move towards autonomous vehicles.

SAIC products currently sold in NZ include the MG ZS and GS SUVs, the MG3 hatchback, the LDV T60 ute, D90 SUV and G-series/V-series vans. The MG vehicles are distributed by a factory-owned company, while the LDVs are handled separately by NZ-owned Great Lake Motor Distributors.

Late this year we'll see a new version of the GS and in 2020 an EV version of the ZS - MG's first-ever pure-electric model.

Other Chinese brands sold in NZ include Great Wall and its SUV offshoot Haval. Chinese owned brands include Volvo and Lotus - Geely holds 100 per cent of the former and 51 per cent of the latter.