In recent days, few things have been as disheartening for the Chinese automotive industry as the situation surrounding SAIC. SAIC Motor Manufacturing Co., Ltd., also known as Shangqi Automobile Manufacturing, has reportedly attempted to launch its own brand projects using the Rover and Ssangyong brands without obtaining approval from the National Development and Reform Commission (NDRC). This move has drawn sharp criticism, with some joking that it's a tough time for SAIC manufacturing, especially after NDRC officials recently warned that the auto sector is suffering from overcapacity and urged restraint in new investments.
The timing couldn't be worse. "It was initially due to the similar name, but even that wasn’t approved by the NDRC," said an informed source. According to reports, SAIC Luwei has since rebranded itself as SAIC. On July 28 this year, Shanghai Automotive announced plans to invest 3.68 billion yuan to establish SAIC Luwei Automobile Co., Ltd. However, the project has yet to gain official approval.
According to insiders, the reason SAIC’s own-brand initiatives haven’t been greenlit lies not with the company itself, but with broader economic conditions. In response, SAIC’s President Chen Hong recently traveled to Beijing for emergency discussions, hoping to find a way forward. At the end of November, Ma Kai, head of the NDRC, emphasized at a national development conference that excessive investment has left the auto industry in a difficult position. With current production capacity standing at 8 million vehicles and only 2.2 million being built, there's a significant surplus.
Chen Bin, deputy director of the NDRC’s Industrial Development Department, revealed that in 2005, market sales were around 5.5 million units, but utilization rates were only 55%. The NDRC has made it clear that next year, they will strictly control new vehicle production capacities. Officials stated that any new projects—whether new construction, offsite development, or expansion—will be evaluated based on whether they involve independent R&D.
SAIC has already set up three key R&D centers for its own brands: the Pan Asia Technology Center, the SAIC Automotive Engineering Research Institute, and an internal brand project team. Pan Asia focuses on joint-venture model improvements and technical R&D commissioned by SAIC, while the SAIC Research Institute handles independent R&D and monitors global trends, including fuel cell technology. A new engineering college worth 1.8 billion yuan is set to begin construction on December 28.
The independent brand project team is tasked with absorbing imported foreign technology and localizing it. It has been working on two major projects: Ssangyong from South Korea and Rover from the UK. Meanwhile, SAIC’s dealer network for its own brand is now seeking investment.
Despite the NDRC’s claim that self-branded projects are not included in the cap, why has SAIC’s project become a target? The NDRC remains cautious when defining what constitutes an “independent brand,†stating that the criteria need further study. However, an anonymous expert criticized the current state of the industry, saying that over 110 OEMs in China produce less than 10,000 units annually, leading to massive waste of resources.
Industry insiders believe that even if SAIC’s project is blocked, it won’t stop the company’s long-term strategy. At a recent Fortune Forum, SAIC President Hu Maoyuan outlined four paths for developing its own brand. While achieving 50,000 units in 2007 without foreign partnerships seems challenging, the company may have to adjust its approach.
If capacity restrictions persist, SAIC may consider two alternative routes: partnering with Nanjing Auto to use their production facilities, or borrowing space from partners for manufacturing. There had even been rumors that SAIC might purchase a workshop at Shanghai Volkswagen to produce its own brand. Although Shanghai Volkswagen hasn’t commented directly, the idea is gaining traction.
Ultimately, companies must adapt to the current policy environment. Questions about whether they truly possess core technologies and whether existing capacities are fully utilized will shape future entry barriers. As a result, strategies like the popular “two-headed†model—separating design and sales—will face stricter scrutiny. Without meeting these thresholds, new projects may struggle to move forward.
In the end, the path for independent brands in China remains uncertain, but one thing is clear: the industry is entering a more regulated and competitive phase.
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