Of the three major automotive groups in China, SAIC Motor has long faced challenges in the commercial vehicle sector. However, this is about to change. A significant development has taken place as SAIC Motor and Iveco, a subsidiary of the Italian Fiat Group, have formed a joint venture that could reshape the landscape of China’s heavy truck industry.
The joint working group has already arrived in Hongyan, Chongqing, marking a new chapter for the region's renowned brand. The formal agreement between SAIC Motor and Iveco involves the establishment of SAIC Iveco Commercial Vehicle Investment Co., Ltd., with both parties holding equal 50% shares. This deal also includes the acquisition of a 67% stake in Chongqing Hongyan Automobile Co., Ltd., which will be managed alongside the remaining 33% held by Chongqing Heavy-Duty Truck Group.
Chongqing Hongyan has a rich history and holds a strong position in the mid-to-high-end heavy truck market. It owns two well-known brands—Hongyan and Steyr—and offers a wide range of heavy trucks priced between 200,000 and 400,000 yuan. The collaboration with Iveco dates back to 2003, when they first aimed to co-develop high-end vehicles. However, the instability caused by Delong’s turmoil initially slowed progress. Now, under the leadership of Chongqing officials, SAIC is stepping in to strengthen its commercial vehicle presence.
According to a middle-level manager at Chongqing Hongyan, the SAIC-Iveco team has already begun operations, with over 30 members involved in key departments such as production and sales. While they currently only have proposal rights, the new company is expected to go public in the third quarter of this year.
For SAIC, expanding into commercial vehicles is a strategic priority. Unlike other major Chinese auto groups, SAIC has focused mainly on passenger cars, leaving a gap in the commercial vehicle segment. Currently, its commercial vehicle offerings are limited to low-profit mini vehicles through SAIC-GM-Wuling. To address this, SAIC is pursuing a dual strategy: developing small vehicles while aggressively entering the heavy truck market.
In its “Eleventh Five-Year Plan,†SAIC aims to integrate domestic and international resources, expand east-west linkages, and build a robust commercial vehicle system. The plan includes increasing commercial vehicle production to 200,000 units by 2007 and aiming for 45,000 heavy trucks by 2010.
Iveco, which has been active in China for nearly two decades, is eager to expand into the heavy truck market. Its current focus is on light trucks through Nanjing Iveco. With the new partnership, it plans to introduce its technology to Chongqing Hongyan, launching new hybrid models with Iveco cabs on Red Rock chassis. An engine company will also be established in Chongqing to produce heavy-duty diesel engines, with targets of 40,000 vehicles and 30,000 engines by 2008.
Despite these positive developments, the heavy truck market remains in recovery. In 2005, it experienced its first negative growth in eight years. Although conditions have improved slightly this year, the market is still struggling. Sales in the first five months of this year increased by just 0.26%, showing slow progress.
Analysts suggest that competition in the heavy truck market will intensify in the coming years, with key players like Sinotruk, Shaanxi Heavy Duty Truck, and Beiqi Foton vying for market share. However, there is still potential for high-end heavy trucks, especially as logistics and transportation continue to evolve toward more specialized and efficient systems.
With this new alliance, SAIC and Iveco are positioning themselves to capture a growing market, leveraging their combined strengths to create a competitive edge in China’s commercial vehicle sector.
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