Automotive Marketing Manager Training Course

Author: Zhang Pingdan / Country: Mainland China
Publisher:
Publish Date: 2006-07-01
Features: The acquisition and high reality determined SAIC to shift from focusing on joint venture profits to establishing high independent brands. They played the acquisition card. SAIC's involvement in General Motors' acquisition of Daewoo in Korea seemed to inspire Hu Maoyuan. Many analysts at the time believed that "the winner of Daewoo would be the ultimate loser," as it had a weak brand and terrifying financial statements. However, GM successfully acquired many of Daewoo's existing models. Many of SAIC's new vehicles were based on Daewoo's technology platforms. Thus, SAIC began searching globally for targets. The fourth-largest car manufacturer in South Korea, SsangYong, which was incurring losses, became SAIC Group's target. Established in January 1954, SsangYong initially manufactured large vehicles such as public transport buses and fire engines. In the late 1980s, it began producing SUV models like the Korando and MUSSO, and in recent years, it has introduced luxury sedan models like the Chairman and Rexton. Currently, it produces 180,000 vehicles annually, holding an approximately 11% market share in South Korea's car market.
On January 27, 2005, SAIC Group Co., Ltd. paid 590 billion KRW to the creditor group of South Korean SsangYong Motor Company, completing the transaction and acquiring a 48.92% stake, officially becoming the major shareholder of SsangYong Motor. While pursuing the acquisition of SsangYong, SAIC also launched a battle for Rover in the UK. On May 28, 2004, as the acquisition of SsangYong was nearing completion, SAIC decided to officially initiate the Rover acquisition plan. At the time, SAIC's independent brand strategy was led by Shanghai Automotive Company Limited, which established a working group under the leadership of its independent brand project team.
The acquisition of SsangYong and Rover would allow the three companies to share development platforms and resources. SAIC's proposal for the Rover acquisition clearly stated its rationale for success through acquisition: to maximize the use of the existing resources of both companies ("making them serve us" and "making them work for us"), fully leveraging synergies. The proposal noted that massive development costs and substantial expenses for molds and production equipment for new models often burden small and medium-sized car manufacturers, severely impacting their financial performance if new products fail. With increasing competition, product lifecycles have become shorter, and investments in new models often face obsolescence before recovering. Year after year, small and medium-sized enterprises are exhausted by the cycle of product updates.
Therefore, SAIC believed that small and medium-sized car manufacturers should seek the possibility of sharing development platforms and resources, as this is the only way to break free from the "investment-loss-reinvestment-loss" trap. However, it is hard to imagine competitors sharing development results. Fortunately, Rover and SsangYong did not conflict in their vehicle platforms or engine numbering systems but rather complemented each other. Through acquisition, they could share product and development resources, as well as sales and after-sales service channels, marking a bold attempt for small and medium-sized car manufacturers to survive and enhance competitiveness beyond the "63" model.
Ultimately, while the Rover acquisition was not fully successful due to the involvement of Nanjing Automotive Group, SAIC still acquired the intellectual property rights to the Rover 75 and 45 platforms and all series engines in December 2004 for ￡67 million. As for SsangYong, after a year of integration, SAIC had full control, and SAIC SsangYong was positioned as a world-class RV producer. The next question was whether SAIC's new independent-brand sedan would use the SsangYong or Rover technology platform, becoming a practical issue. Due to the time required to integrate SsangYong and the initial resistance from Koreans to Chinese involvement, SAIC had to rely on Rover's car platform first to launch its own sedans.
SAIC's goal is to become a full-range passenger car manufacturer. It plans to use the Rover platform to enter the high-end market and then leverage the SsangYong platform to target the mid-to-low-end market. Typically, SsangYong's RV production platform is based on passenger cars, which would facilitate its conversion into SAIC's sedans. The low R&D costs and affordable prices of Korean cars are currently popular in major global markets. With this, SAIC's use of the SsangYong platform and R&D capabilities would shorten the time to become a full-range passenger car manufacturer. Moreover, SAIC SsangYong's ambitions go beyond this. If SAIC can use this high-end car bearing the Rover brand to enter the European market, it would mean that SsangYong's RVs, after modification, could also enter the European market under the Rover brand. Of course, this would also allow SAIC to gain access to the 1,000-plus global sales networks previously used for Rover operations.
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