SAIC upgrades tie-up with Iveco for CV market growth

Shanghai, May 7 (Gasgoo.com) With its acquisition of Nanjing Auto in early April, Shanghai Automotive Industry Corporation (SAIC) can boost its sedan production capacity, and will be become China's largest maker of commercial vehicles (CV) as well. After the Fiat facility with Nanjing Auto became a SAIC's Nanjing plant, the Nanjing joint venture Naveco of Fiat group CV-maker Iveco will also enter the SAIC complex.

Paolo Monferino, CEO of Iveco,  said that after the merger of Nanjing Auto into SAIC, it is more possible for Iveco to have a larger platform for its operation in China, and the profits-making capability of Naveco has also boosted Iveco's confidence in its priority strategy in this fast-growing market.

When SAIC and Iveco recently announced the upgrade of their cooperation, the automakers meanwhile unveiled their jointly developed first vehicle model -- Power Daily, which features the new generation the powerful 3.0L F1C engine and the second generation BOSCH common-rail electric injection system. As Iveco's Daily model specially designed for the Chinese market, Power Daily is expected to become the benchmark for China's future light commercial vehicles.

Iveco and SAIC first cooperated in 2005 by establishing SAIC Iveco Commercial Vehicles Co Ltd., which has produced commercial vehicles using Iveco's technology. The joint venture bought a 67% stake in Chongqing Hongyan Auto, one of China's leading trucks makers, to build another company making diesel engines. Last year, SAIC Iveco Hongyan Commercial Vehicle Co., Ltd. and SAIC Fiat Hongyan Engine Assembly Co., Ltd. were established as two subsidiaries of SAIC to produce 40,000 trucks and 100,000 engines annually in Chongqing.

SAIC aims to sell 700,000 commercial vehicles this year, with the Naveco and SAIC GM Wuling as its CV market leaders. Industry statistics show that the Iveco Yuejin (made by Naveco) has less than 10% light truck market share, leaving much scope for growth. If the sales of Yuejin CVs can reach the target of 65,000 units in 2008, SAIC will have an over 30% growth in the CV market. 

In 2007, SAIC sold 553,000 commercial vehicles, up 20% year on year (y/y). SAIC-GM-Wuling, the most important contributor to SAIC's CV sales, sold 520,000 mini-commercial vehicles last year, up 23.8% y/y while SAIC-Iveco-Hongyan sold 24,000 trucks, up 69.7% y/y.