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China's SAIC and Nanjing Auto move closer towards partnership

Mr Roger K. Olsson | 28.07.2007 15:27 | Analysis | Other Press | Technology | London | World

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Saturday, July 28, 2007


Jul. 28, 2007 (Xinhua News Agency delivered by Newstex) -- China's SAIC and Nanjing Auto move closer towards partnership

BEIJING, July 28 (Xinhua) -- China's biggest automaker Shanghai Automotive Industry Corporation (SAIC) and Nanjing Automobile Corporation (NAC) moved closer towards their partnership as the two signed a letter of intent on cooperation, the Shanghai Securities News reported on Saturday.

The agreement, inked by SAIC and Yuejin Group, the parent company of NAC, said the two would establish a joint working team to discuss a 'full-scale' cooperation ranging from auto, auto parts to auto-related services.

Analysts saw rare efficiency in the announcement as it took only more than two months for the two companies to agree on the cooperation, while it may take one or two years in a common practice.

However, details concerning the cooperation, such as the shareholding of the two, remain unresolved.

The cooperation was achieved in accordance with the country's industrial policy for the auto sector, meant to integrate the resources of the two auto producers and improve the country's ability to develop home-grown auto brands, a SAIC official told the newspaper.

The two companies said it would be a win-win deal for both, and hailed the cooperation as the ally of two strengths.

SAIC, a partner of Volkswagen AG and General Motors (NYSE:BGM) , topped the sales list in the domestic market last year, with sales of 1.34 million vehicles, including 915,000 passenger cars and 429,000 commercial vehicles.

NAC would be able to provide a variety of car models, including a total of 120 models for commercial vehicles out of its cooperation with the Italian auto giant Fiat, for future research development, said Jia Xinguang, a senior auto analyst.

The two companies were also developing home-grown auto brands on the basis of technologies from the same overseas company to produce competing car models.

NAC outbid SAIC to acquire the bankrupt British carmaker MG Rover Group and its engine producer, Power Train Ltd, for 53 million pounds in 2005, and it unveiled its MG 7 series in March this year.

SAIC bought from the MG Rover Group the technology for two Rover models -- the 25 and 75 -- and their engines in 2004, and presented its Roewe 750, a Rover 75-based sedan in October last year.

If the two reached the final agreement on the merger, there would emerge a giant auto producer in China with annual sale of two million by 2010, analysts said.

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Mr Roger K. Olsson
- e-mail: rogerkolsson@yahoo.co.uk
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