(Reporter Gao Bin) Zhang Hui, shareholder of Shanghai Auto, wondered what position Nanjing Iveco Motor Co., Ltd. (referred to as “Nanjing Ivecoâ€) was in the Chinese auto industry, but almost all reported The media of the “South-South Cooperation†all stated that one of the purposes of the cooperation between the two parties was that the Shanghai Automotive Industry Corporation (“SAICâ€) coveted Nanjing Iveco.
Shanghai Automobile’s full name is Shanghai Automotive Co., Ltd. and it is a listed company controlled by SAIC. Nanjing Iveco is a subsidiary of Nanjing Automobile Group Co., Ltd. (“Nanqi Groupâ€) that produces commercial vehicles.
On July 27, SAIC signed a letter of intent for cooperation with the parent company of Nanjing Automobile Group. The two parties started substantive work on the full integration of SAIC and SAIC.
The rumors of the cooperation between the two companies have been long-standing, and the capital markets that have always enjoyed the theme of asset restructuring have also given positive responses. Only in the first four weeks of July, Shanghai Auto's share price rose by 38%.
In the first half of 2007, Nanjing Iveco’s cumulative sales reached 12,207 units, which represented an increase of 25% over the same period of last year and more than doubled the industry’s 11.06% year-on-year increase. More importantly, its own brand “Jiujin†light truck has been included by Italy’s Iveco. The focus of global commercial vehicle strategy is to sell in its global channels, with a focus on the world's secondary and tertiary markets, and it is expected to become China's largest export light truck brand.
Iveco turned
In the Chinese automotive industry, where the group has grown up, the development path of Nanjing Automotive Group in recent years can be described as frustrating, and its subsidiary Nanjing Iveco is a good quality asset.
Nanjing Iveco, established on March 1, 1996, is the largest cooperation project between the governments of China and Italy. In January 2007, with the integration of Yuejin Auto's business of Nanjing Automobile Group into Nanjing Iveco, this company, which is expanding toward a full range of commercial vehicles, has become one of the largest and most complete commercial vehicle companies in China. The combined Nanjing Iveco can produce light passengers, light trucks, heavy trucks, military off-road vehicles, passengers and special vehicles, with assets of 8 billion yuan and the first-class Jiangning commercial vehicle production base in Asia.
On February 6th, at the launching ceremony of building a world-class commercial vehicle base, Lana, Nanjing's first foreign general manager, said confidently: “Nanjing Iveco will strive to exceed 100,000 sales in 2007 after its integration. The goal is to achieve 20% increase in Iveco brand and 50% increase in Yuejin brand."
Since its establishment in 1996, Nanjing Iveco has been widely known as the image of light passenger manufacturers and has occupied 50% of the high-end market share. This segment of the market has little sales, but the profitability is considerable.
"If before 2007, Iveco was a high-end light commercial vehicle company, then after 2007, Nanjing Iveco will achieve full expansion to a full range of commercial vehicle companies. This is the beginning of a 'new South Vic era'. "The solemn brand director of Nanjing Iveco Marketing Department explained the significance of this interpretation of the "Financial Times" and the leap forward.
According to solemn statements, after the integration, Nanjing Iveco was positioned as a first-class commercial vehicle company in China and even in the world, and established a complete product line. The new Iveco is currently laying out a domestic and foreign market from the perspective of a complete commercial vehicle company.
According to the solemn introduction, based on the stability of the domestic high-end market, Iveco's product line began to extend to the middle. In the first quarter of this year, Nanjing Iveco launched a marketing campaign codenamed "Ice-breaking Action", which for the first time in 10 years hit mid-range markets below 100,000 yuan. The sales volume of its two main logistics models “Kangjia†and “Kangyun†has nearly doubled in the first half of the year, and it has also launched a multi-function vehicle that can meet three mainstream functions including business reception, staff commuting and goods distribution. Kangda."
Gold development period
However, for investors such as Zhang Hui, even if Nanjing Iveco has such a good performance, it seems that it is still not enough to impress the SAIC Group, and even more should not be sought after in the capital market. In 2006, SAIC Motor Group sold more than 1.34 million total vehicles, more than 60 times the sales of Nanjing Iveco. The gap between the two companies is huge.
“Commercial vehicles are the short-board of SAIC Motor. If they can obtain the resources of Nanjing Iveco through cooperation with the Nanjing Automobile Group, SAIC Motor Corporation will thus become a local giant that can produce two series of cars and commercial vehicles, and its overall layout for overseas markets. Lay a solid foundation,†said Zhang Xin, an analyst at Guotai Junan Securities. He believes that in the overall layout of SAIC's commercial vehicles, it is always carried out around Iveco, so Nanjing Iveco is the key to determining the success of this layout.
On June 15 this year, SAIC Motor, SAIC Iveco Commercial Vehicle Co., Ltd. (Abbreviation: "Iveco Italy") and Chongqing Heavy Vehicle Group Co., Ltd. (abbreviation: "Chongqing Heavy Duty Truck") invested in the tripartite joint venture - SAIC Motor. Iveco Hongyan Commercial Vehicle Co., Ltd. (abbreviation: "Shangqi Iveco Hongyan") was held in Chongqing.
This joint venture company mainly engaged in production of heavy trucks has a registered capital of 1.3 billion yuan, of which SAIC Iveco Commercial Vehicle Investment Co., Ltd. (Shanghai Automotive and Italian Iveco 50:50 joint venture) accounts for 67% of the shares, and Chongqing Heavy Duty Truck accounts for 33%. The shares are for 30 years.
Formerly known as SAIC Iveco Hongyan in Hongyan, Chongqing, it is a joint venture company established by Chongqing Heavy Duty Truck and Hunan Torch at the end of 2002. In December 2003, Chongqing Hongyan and Italy Iveco reached an agreement of intent to jointly develop and produce high and mid-range heavy trucks. However, due to the fall of Xinjiang Torron, the controlling party of the Hunan Torch, the Italian Iveco was daunted.
The SAIC Group, which had a good opportunity, quickly made up for it. On December 15, 2004, it cooperated with Italy’s Iveco and signed a first framework agreement with Chongqing Zhongqi to reorganize Chongqing Heavy Duty Truck. At that time, there was also news that SAIC Motor Corp. wanted to cooperate with Nanjing Automobile Group and it became a hot spot in the industry.
In the view of SAIC, Nanjing Iveco is not only a commercial vehicle manufacturer focusing on the high-end light passenger vehicle market, but also holds key technologies in this field. Relying on the strong technical strength of Italy Iveco, Nanjing Iveco became the first light vehicle company with independent research and development capabilities in China. Since 1999, it successfully sold back more than 50,000 sets of engine assembly components meeting European advanced standards to Italian Iveco. .
SAIC Group, which has an international dream, clearly knows that Iveco's diesel engine technology is in a global position. The world’s first light rail diesel engine was introduced by Iveco in 1999. Due to the fact that European modern diesel engines consume more than 30% less fuel than equivalent displacement petrol engines, the market share of diesel light passengers in Europe is as high as 85%. Before 2004, the market share of diesel light passengers in China was high. Only 30%, this huge gap means market potential.
Sure enough, with the overall recovery of the commercial vehicle market, after the 2004 and 2005 two years of downturn, in 2006, the light passenger market from the previous year's year-on-year increase of -1.71% to 8.05%, of which diesel light passengers increased year-on-year The amplitude exceeds 30%.
In 2007, the growth of diesel light passengers continued unabated. According to the statistics of the China Association of Automobile Manufacturers, in the first half of the year, domestic gasoline light passengers only sold 75,200 vehicles, while diesel light passengers sold a total of 88,200 vehicles, achieving an increase of 14.85%, which already accounted for more than 50% of the market.
Global Strategic Base
More importantly, with the second wave of commercial vehicles flocking to Asia, Italy's Iveco began to accelerate its deep cooperation with Nanjing Automobile Group.
In June last year, Italy Iveco resolutely sold a 15% stake in India's Leland Motors and further transferred funds to China. In the integration of Yuejin, Italy Iveco added another 400 million yuan to Nanjing Iveco, and included Nanjing Iveco in Italy. Part of the Iveco global system. "China and Italy are both Iveco's two global export bases," solemnly said.
According to the solemn introduction, following the agreement reached between Nanjing Automobile Group and Iveco of Italy, after the business integration with Nanjing Iveco, Yuejin will be an independent product brand, fully integrated into Iveco's operating system. Italy Iveco is upgrading the quality of the Yuejin brand, which has a history of more than 50 years. The Yuejin 08, featuring the European light truck, will be launched early next year.
"Nanjing Iveco will also use Iveco's global sales network to leapfrog into the world's secondary and tertiary markets with outstanding price/performance advantages. These sales networks are spread over more than 100 countries and have more than 1,000 dealers, which will also promote the Iveco brand. The market share and influence of Yuejin brand in the global commercial vehicle market is one of the focuses of Iveco's global strategy."
The first foreign general manager of Nanjing Iveco Lana also publicly stated that in the next three to four years, the sales volume of Yuejin brand will reach 150,000, of which more than half will be exported overseas.
If it is possible to enter into cooperation with the Nanjing Automobile Group, SAIC Motors can sell its own brand of commercial vehicles through Iveco's global channels. This is indeed a strategic step. “Chen Xin Securities analyst Li Chunbo said that if the cooperation is successful, SAIC Motor’s commercial vehicles from light trucks to heavy trucks may use Iveco’s global sales network, which will greatly reduce the cost of entering the overseas market. Dongfeng Group passed Nissan The auto's cooperation will export its own brand heavy truck products through Nissan's global sales network.
In addition, as China's economy continues to improve, domestic commercial vehicles are ushering in new opportunities for development, and any sense-sensitive company cannot ignore it. Nanjing Iveco believes that the capacity of the mainstream light truck market with a price of RMB40,000-$7 million only for Yuejin Light Trucks is over one million units, accounting for 80% of all light truck market. This is why Nanjing Iveco is determined to become a full range of commercial vehicle companies. One of the factors.
The data from the China Association of Automobile Manufacturers also shows that from 2006 onwards, the most significant feature of China's commercial vehicle market is that market share is increasingly concentrated in the hands of a few big companies. Dongfeng Group, FAW Group and China National Heavy Duty Truck Corporation have occupied 62.8% of the heavy commercial vehicle market. In the area of ​​light passengers, several leading companies represented by Iveco and Jinbei also achieved a total sales volume of two-thirds. In the international market, the market has concentrated its market share towards large companies because the country has adopted an export licensing system. Obviously, it has driven the number of commercial vehicle exports to soar. In the first six months of this year, China’s auto exports increased by 71.2% year-on-year, of which commercial vehicles accounted for 65% of total exports.
View related topics: SAIC commercial vehicle expansion
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