Two sons copy the Wuling pattern leap 15%

Although sales volume in China had exceeded 1 million vehicles as of mid-August this year, sales and market share in China have continued to grow. However, for GM, it is necessary to achieve sales of 2 million vehicles in China in 2013. The goal, and an early market share of 15% in the Chinese market, the search for new partners and the establishment of new joint ventures may be one of the quickest “shortcuts” to achieve all of the above goals.

FAW-GM's 2 billion joint venture to establish a joint venture for commercial vehicles

Yesterday morning, General Motors and China FAW announced in Changchun, Jilin that the joint venture FAW-GM Light Commercial Vehicle Co., Ltd. (hereinafter referred to as "FAW-GM") was formally listed. FAW and GM each hold 50% of the shares in the joint venture company. The total investment of the project is 2 billion yuan, the registered capital is 1.2 billion yuan, the joint venture period is 30 years, and the company's registered place is Changchun City, Jilin Province. According to the agreement reached between the two parties, FAW's FAW Harbin Light Vehicle Co., Ltd. ("FAW Harbin") and FAW Hongta Yunnan Automobile Manufacturing Co., Ltd. ("FAW Hongta") are joint venture subsidiaries.

In order to achieve the goal of occupying 15% of the market share of China's auto market at an early date, GM will start looking for opportunities to compete in the commercial vehicle market in China since 2007. Jiangling, Yuejin and Jianghuai have all entered the vision of GM's strategic cooperation plan for commercial vehicles, but due to various reasons, the cooperation between GM and the aforementioned manufacturers has been fruitless. Several years ago, in early January of this year, GM and FAW signed a preliminary agreement for cooperation in the field of light commercial vehicles. However, due to the impact of the general bankruptcy reorganization process, the signing of the two sides could not be shelved.

GM aims to replicate SAIC-GM-Wuling

It is understood that FAW-GM will be mainly engaged in the research and development, production, sales, warehousing, export and logistics of light trucks, light buses and related assemblies and parts. Existing products and future new products based on the continuous development of FAW-branded products will still use the FAW Jiefang brand. Products imported from GM may use the GM brand.

FAW Harbin is a state-owned large and medium-sized enterprise with 40 years of history and more than 20 years of experience in automobile production. It has an annual production capacity of 80,000 "Liberation" series of 1 to 3 tons of light weight light trucks and pickup trucks. FAW Hongta has double-shift production capacity of 150,000 vehicles a year, and it has two platforms: commercial vehicles and passenger cars. According to FAW's previous plan, FAW Hongta will build its largest auto base in the Southwest. Xu Jianyi, FAW's general manager, said yesterday that “FAW and GM’s cooperation in light commercial vehicles is of great significance to achieving their respective strategic goals. This is an important growth point for FAW to expand its own product market size and further improve FAW’s market position.” GM executive vice president and president of international operations, said Lorie legislation, "the joint venture will integrate the FAW and versatile light commercial vehicle resources to meet the needs of consumers."

The industry generally believes that the largest “attempted” joint venture between General Motors and FAW to establish a commercial vehicle is to replicate the successful model of SAIC-GM-Wuling. In 2002, General Motors and SAIC reorganized Liuzhou Wuling. Along with the rapid growth of the Chinese automobile market, the market share of SAIC-GM-Wuling soared from 22% to 46.8%, and sales revenue increased from 3.77 billion yuan to 21.48 billion yuan. In the light commercial vehicle market, the combined sales volume of FAW Harbin and FAW Hongta last year was less than 80,000 units, but the sales volume in the sub-segment reached more than 1 million units. In particular, since the beginning of this year, the promotion of light commercial vehicle incentives such as “automobiles going to the countryside” and swap subsidies has been promising. The market outlook for light commercial vehicles is promising.