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Wed, May 18, 2005 - Page 12 News List

GM may help SAIC build a brand

AUTO MARKET Acknowledging that such cooperation would be `unusual,' GM's chief executive said that the company may help SAIC set up an independent brand

AFP , BEIJING AND SHANGHAI

General Motors may cooperate with Shanghai Automotive Industry Corp (SAIC, 上海汽車工業) to help its China joint-venture partner to develop an independent brand, GM chief executive Richard Wagoner said yesterday.

Speaking at a Fortune Global Forum roundtable with SAIC president Hu Maoyuan and BMW chairman Helmut Panke, Wagoner said that such cooperation would be "unusual" but possible and perhaps beneficial.

"The scope of our relationship is solid; we certainly have had an opportunity to talk with both Mr. Hu and government officials about the desire for SAIC to develop their own brand," he said.

"Working together on it may help to improve the cost base or competitiveness of all the products we produce in co-operation with SAIC."

SAIC, one of China's top auto makers, said last month it has set a goal to produce 50,000 cars under its own brand by 2007 as it ramps up research at its technical centers following the collapse of a planned tie-up with troubled British car company MG Rover.

Hu said that the company would seek the participation of its joint-venture partners, GM and Volkswagen of Germany, and that "our own brand and that of the joint venture do not necessarily have to compete against one another.

Hu said he expects SAIC and its joint ventures will have combined annual output of 1 million vehicles next year.

SAIC is determined to build its own cars as part of its ambitions to become a global company, which includes an overseas listing.

Industry analysts have said this puts it on a collision course with its partners who do not want SAIC to become a competitor at home or abroad.

Hu said that it would "not be desirable" for SAIC to operate its venture totally by itself and that it may use international resources for purchasing and possibly joint production of its own brand with its partners.

China's auto market may be slowing sharply but the government continues to make rosy predictions, with the latest report yesterday claiming annual demand will climb to 18.9 million units by 2020.

Although car-sales growth fell 15 percent last year from the more than 70 percent seen in 2003, sales will continue to expand in line with China's rapidly growing wealth, said a report from the State Council Development Research Center.

The government think-tank report, cited by the China Daily, predicts that annual vehicle demand will hit 9.4 million units in 2010, 13.5 million in 2015 and by 2020 the country will see 18.9 million new vehicles a year on its roads.

In 15 years, passenger cars will make up 17.27 million of the total, a level nearly equal with current annual car demand in the US of 17.46 million units.

Vehicle production in China last year was just above 5 million units, making it the world's third largest producer after the US and Japan.

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