SAIC Group Signs Letter of Intent for Cooperation with Yuejin Group
On July 27, SAIC signed a letter of intent with Yuejin Group to explore comprehensive collaboration in the automotive sector. The agreement outlines the formation of a joint working group to discuss potential cooperation in vehicle manufacturing, auto parts, and service trade, as well as the integration of related assets. This initiative aims to achieve full consolidation between SAIC and Nanjing Automobile, marking a significant step toward deeper collaboration.
Yuejin Group, one of China’s pioneering automotive manufacturers, owns Nanjing Automobile Group, which has extensive capabilities in R&D and production of automotive products. With total assets of RMB 12 billion and over 400 affiliated companies, the group includes subsidiaries such as Nanjing Yuejin, Nanjing Fiat, Nanjing Iveco, and Nanqi Xinyatu. According to the letter of intent, both Yuejin and Nanjing Auto are interested in reorganizing their assets and cooperating closely with SAIC on vehicle and parts businesses.
SAIC Motor, a global top 500 company, had sold 1.34 million vehicles in 2006, ranking first in domestic sales. Its listed subsidiary, Shanghai Automotive, holds 83.83% of shares and is the largest vehicle company in China. As a major shareholder, SAIC has pledged to avoid any competition with SAIC Motor during future asset restructuring.
The partnership between SAIC and Nanjing Automobile has long been under industry scrutiny. While the initial steps have been taken, details about the future cooperation remain unclear. Both parties have remained cautious, with SAIC stating that the letter of intent is just the first stage and further discussions will be led by the joint working group.
Industry analysts believe the cooperation is complex, with no clear path forward. While the government plays a key role in facilitating the partnership, the enthusiasm from both companies is limited. This may affect the overall effectiveness of the collaboration.
According to Yao Hongguang, a senior securities analyst, Nanjing Automobile faces financial challenges, with only Nanjing Iveco showing profitability. The introduction of the MG project requires substantial investment, which could become a bottleneck. Meanwhile, SAIC's strengths in capital, talent, and production experience make it a valuable partner for Nanjing Auto.
Zhong Shi, a renowned car critic, points out that while the cooperation could enhance SAIC’s product lineup and competitive edge, the success of the partnership depends on real integration rather than just data improvements. He also notes that SAIC may not provide direct financial support to Nanjing Auto, which would need to seek funding independently.
An official announcement from Shanghai Automotive on July 28 confirmed that the current cooperation is still in the letter of intent phase. Major agreements involving equity or asset transfers require approval from relevant authorities, and final decisions will follow internal procedures. Additionally, Nanjing Auto emphasized that its legal status, registration location, and tax area will remain unchanged throughout the process.
This development marks a critical moment in the automotive industry, with potential long-term implications for both companies. Whether this collaboration leads to meaningful integration remains to be seen.
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