Shanghai Automotive Industrial Corporation's Strategies for Global Expansion

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Case Details:

Case Code : BSTR171
Case Length : 16 Pages
Period : 1984-2005
Organization : Shanghai Automotive Industrial Corporation
Pub Date : 2005
Teaching Note : Available
Countries : China
Industry : Auto and Ancillaries

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“SAIC will become one of the top ten car companies in the world within the next ten to 15 years. It is likely that teenagers in Europe or the U.S. will be considering a Shanghai Auto car within the next decade.”

- Graeme Maxton, an industry consultant in Britain, in 2004.¹

“They need a very clear strategy and also excellent execution. Their lack of experience is in that area. There is a lot they have to learn.”

- An international consultant who worked with SAIC, in 2004.²

SAIC to Launch Own Car Brand

In April 2005, the Shanghai Automotive Industrial Corporation (SAIC) announced that it would launch its own brand of cars by early 2007. This announcement generated considerable interest in the global automotive industry. The state-owned SAIC was one of the ‘Big Three'auto companies in China along with First Auto Works (FAW) and Dongfeng Motor, and operated primarily through joint ventures with foreign companies investing in the country. SAIC's major joint ventures were with Germany's Volkswagen AG (Volkswagen) and General Motors Corp. (GM) of the United States. (Refer Exhibit I for the major joint ventures in China). Upto this point in time, the company did not have any passenger car brands of its own and only marketed its partners'vehicles.

Announcing SAIC's plans to develop its own car brand, Zhao Fenggao, the company's general manager said that the production facility would be based at Yizheng in the Jiangsu province (where Shanghai Yizheng Automotive Co., Ltd, a wholly owned company of SAIC, already produced multi-utility vehicles under the Sabre brand³).

He also said that the company planned to manufacture 50,000 cars in the first year of production. No other details about the cars were made known. Analysts however speculated that the cars might be based on the Rover 75 model manufactured by British automaker MG Rover.

SAIC had purchased the intellectual property rights to the Rover 75 and the Rover 25 models, along with the Powertrain engine business from MG Rover in 2004 for £67 million (The Rover brand name however could not be used by SAIC as BMW owned the rights to that).

SAIC to Launch Own Car Brand - Next Page>>


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1] Alex Taylor III, “Shanghai Auto wants to be the World's Next Great Car Company,” Fortune, September 20, 2004.

2] Alysha Webb, “SAIC wants to become a global top 6 player,” Automotive News, November 15, 2004.

3] Sabre was widely used as a police vehicle in China. It was built on the General Motors OPEL S4200 platform.