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 evaluate potential areas of cooperation, including vehicle manufacturing, auto parts, and service trade. The ultimate goal is to restructure and fully integrate SAIC with Nanjing Automobile, aiming for a more cohesive and competitive entity.
Yuejin Group, one of China’s pioneering automakers, owns Nanjing Automobile Group, which has extensive capabilities in R&D and production across various vehicle segments. With total assets reaching RMB 12 billion, the group operates 25 subsidiaries, seven joint-stock companies, and over 400 affiliated firms. Its key subsidiaries include Nanjing Yuejin, Nanjing Fiat, Nanjing Iveco, and Nanqi Xinyatu. Both Yuejin and Nanjing Auto are interested in asset restructuring and plan to collaborate closely with SAIC on vehicle and parts operations.
SAIC Motor, a Fortune 500 company, was the top-selling automaker in China in 2006, with over 1.34 million units sold. Its listed subsidiary, Shanghai Automotive, holds an 83.83% stake and is the largest domestic automotive company by market capitalization. SAIC has assured that future asset reorganization will avoid internal competition with SAIC Motor.
The partnership between SAIC and Nanjing Auto has long drawn industry attention. After signing the letter of intent, both parties will form a working group to outline next steps, including due diligence and other preparatory work. However, details about future cooperation remain confidential, with both sides emphasizing that further discussions will be handled by the joint team.
Industry experts suggest that the complexity of the collaboration makes it difficult to predict its final structure. While government support is evident, the enthusiasm from the companies themselves appears limited, which may affect the overall synergy. Analysts believe that the integration could begin with specific assets, such as Nanjing Auto or Nanjing Fiat, depending on strategic priorities.
According to Yao Hongguang, a senior securities analyst, Nanjing Auto faces financial challenges, with only Nanjing Iveco generating consistent profits. The introduction of the MG project requires significant investment, posing a potential bottleneck. Meanwhile, SAIC brings strengths in capital, talent, and production experience, making a full asset integration likely, though the exact path remains unclear.
Zhong Shi, a well-known car critic, points out that the impact of the collaboration is still uncertain. While SAIC could benefit from a more complete product lineup, especially in commercial vehicles, real benefits depend on substantial integration. If the cooperation remains superficial, the advantages may not translate into tangible results. Additionally, SAIC may not provide direct financial support to Nanjing Auto, which would have 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. Key agreements, particularly those involving equity or asset transfers, require approval from national authorities, local governments, and internal company reviews. As a result, many uncertainties remain.
Nanjing Auto also emphasized that the collaboration will maintain three key elements: the legal status of each entity, the place of registration, and the tax jurisdiction will remain unchanged. This approach aims to preserve autonomy while pursuing strategic alignment.
For now, the partnership represents a cautious first step toward deeper integration, with much yet to be determined.
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