Of the three major automotive groups in China, SAIC Motor has long struggled to make a mark in the commercial vehicle sector. However, this is about to change as the company takes a bold step into the heavy truck market through a strategic partnership with Italian automaker Iveco.
A formal joint venture between SAIC Motor and Iveco has been announced, creating SAIC Iveco Commercial Vehicle Investment Co., Ltd. with equal 50:50 ownership. The deal, approved by the Chinese government, includes the acquisition of a 67% stake in Chongqing Hongyan Automobile Co., Ltd. The remaining 33% will be retained by Chongqing Heavy-duty Truck Group. This collaboration marks a significant shift for SAIC, which has historically focused on passenger vehicles.
Chongqing Hongyan, a well-established brand in China’s heavy truck industry, brings valuable experience and a strong market presence. It owns two key brands—Hongyan and Steyr—and offers a range of heavy trucks priced between 200,000 and 400,000 yuan, targeting the mid-to-high-end segment. The partnership with Iveco, which first explored collaboration back in 2003, had stalled due to financial instability at the time. But under the guidance of Chongqing's leadership, SAIC stepped in to fill the gap.
According to insiders, the SAIC-Iveco joint working group has already arrived in Chongqing, with over 30 members now embedded in key departments such as production and sales. While they currently have only advisory roles, the new company is expected to go public in the third quarter of this year.
For SAIC, the move into commercial vehicles is a critical part of its "Eleventh Five-Year Plan." The company aims to balance its focus between small, low-profit mini trucks and high-value heavy trucks. By leveraging both domestic and international resources, SAIC seeks to build a robust commercial vehicle system and expand into the western regions and eastern container markets.
Iveco, which has been active in China for nearly two decades, is eager to expand into the heavy truck and engine sectors. The partnership will see the introduction of Iveco technology into Chongqing Hongyan, including the launch of a new hybrid truck featuring an Iveco cab on the Red Rock chassis. Additionally, a joint engine company will be established to produce heavy-duty diesel engines and other machinery, with plans to reach 40,000 vehicles and 30,000 engines by 2008.
Despite these positive developments, the heavy truck market remains challenging. In 2005, it experienced its first negative growth in eight years, adding uncertainty to SAIC’s expansion strategy. Industry insiders report that sales are still recovering, with some companies struggling to meet targets.
However, analysts believe the market will eventually rebound. With China’s logistics and transportation sectors still developing, there remains strong demand for cost-effective, fuel-efficient trucks. At the same time, the push toward specialized and containerized transport suggests a growing need for high-performance, high-capacity heavy trucks.
As SAIC and Iveco move forward with their joint venture, the future of China’s commercial vehicle industry looks more promising than ever.
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