Cars

Minivan giant joins fray in battle for mid-priced auto segment

By Xu Xiao (China Daily)
Updated: 2010-11-29 14:13

BEIJING - China's biggest minivan producer SAIC-GM-Wuling Automobile Co unveiled the first car under its newly created Baojun brand on Nov 22, a model designed to tap rising demand for mid-priced passenger cars.

The Baojun 630, based on GM's Buick Excelle, was unveiled at the brand's headquarters in Guangxi.

The new Baojun is the result of a three-way partnership formed in July between Shanghai Automotive Industry Corp (SAIC), General Motors (GM) and Guangxi's Liuzhou Wuling .

The new venture plans to compete with indigenous brands such as Chery and Geely, which currently dominate the car market in small cities and rural areas.

The Baojun 630 was designed by GM-SAIC's Pan Asia Technical Automotive Center in Shanghai.

With small displacement, 1.5-liter engine and low price, the car targets the medium-priced segment, said Shen Yang, general manager of SAIC-GM-Wuling.

As well, the model will eventually be sold in India and other countries, Shen said.

The partnership will make more models to complete the Baojun lineup in the next few years, the company said.

SAIC, the biggest shareholder in the venture with a 50.1 percent stake, already has two other wholly owned brands - the Roewe and MG - targeting more affluent buyers.

GM also views the lower-cost Baojun as complementary to its China portfolio.

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According to GM's recent filing with the US Securities and Exchange Commission, the auto giant plans to increase its stake in SAIC-GM-Wuling to 44 percent, 10 percent more than its current share.

In exchange for the bigger share, GM will provide its technologies for Baojun until 2013.

Baojun cars will hit the market through an all-new sales network in 2011.

In 2007, Guangqi Honda Automobile Co, a joint venture between Guangzhou Automotive and Honda Motors, unveiled its self-developed brand Everus.

A concept model Everus made its debut at the Beijing auto show in April. The first of its cars is expected to roll off the production line next year.

Dongfeng Nissan is also launching a new brand, the Venucia, which was designed and developed specifically for Chinese consumers.

Analysts say the Venucia, which is expected to hit the market in 2012, will be an archrival to Baojun.

Last year the State Council released plans to boost all-new Chinese brands.

An important driver of the trend toward new brands by Sino-foreign joint ventures is demand in small cities and rural areas, according to Xu Changming, an official of the State Information Center.

In 2009, passenger car sales in small cities increased 67.7 percent over the year previous, 20 percentage points higher than in large cities.

Overall market share in large cities has dropped a few percentage points annually over the past three years, while the percentage of overall sales in small cities increased at the same rate, said Xu.