Credit: Visual China

BEIJING, July 5 (TMTPost) – SAIC Motor Corp., Ltd. (600104.SH) has included the construction of a plant in Europe in its plans and is currently in the process of selecting a location.

This announcement was made by Yu De, the General Manager of the company’s international business department, during a media briefing on Tuesday.

In December 2019, SAIC Motor held a meeting dedicated to studying the European market. During this meeting, it was proposed that merely selling cars in Europe would not suffice, and if sales in the European market were to exceed 100,000 units, serious consideration should be given to establishing a manufacturing plant there. In 2022, the company achieved its sales target in the European market.

During the first half of 2023, SAIC sold a total of 115,000 units in the European market, up 143% from the same period of 2022. In three months, sales exceeded 20,000 units. Based on the strong performance, the company anticipates annual sales of over 200,000 units by the end of the year.

SAIC Chairman Chen Hong has recently accompanied Chinese Premier Li Qiang on a visit to Germany and France. Yu further revealed that during the first half of 2023, Chen and SAIC President Wang Xiaoqiu made multiple visits to Europe, and assessed the operational feasibility of the local plant construction plan.

Yu emphasized that market demand and scale are the primary factors for SAIC’s decision to establish overseas plants. Europe’s automotive market, ranking third only after China and the United States, has significant potentials. The company’s electric MG4 model is well-suited for local production, with a projected target of 100,000 units in the European market in 2023.

The purpose of SAIC’s plan to build a factory in Europe is twofold: to solidify its long-term business prospects in the European market and to mitigate potential risks.

The dominance of Chinese companies in the electric vehicle sector has raised concerns among European car manufacturers and local officials in recent times. Media reports from Britain have highlighted that the truly appealing electric cars available in the European market are either made in China (such as Tesla, exported from the Shanghai factory) or made by Chinese car makers (like SAIC’s MG).

The European auto industry has been shaken by such accolades to Chinese electric vehicles, as reported by an attendee of a recent industry conference in Europe. Discussions within the industry have been focused on how to effectively address the challenges posed by Chinese manufacturers. Furthermore, rumors have emerged that Europe might consider launching an anti-dumping investigation into Chinese electric vehicles.

Yu emphasized that the European market remains highly open so far. He pointed out that establishing a factory in Europe is a profitable venture, so long as the sales surpasses 100,000 units. Additionally, investing in local production helps mitigate the risks associated with foreign exchange rate fluctuations.

He further highlighted that investing in and building factories in Europe not only creates jobs locally but also provides a conducive and stable long-term business environment. Apart from Europe, Chinese automotive companies are expanding their presence in various markets worldwide, leveraging their product quality and cost advantages. However, these expansion plans face unique challenges in different countries and regions. As a result, Chinese companies are exploring diverse strategies to seize overseas opportunities.

According to recent reports in the Indian media, an Indian company, along with local employees and dealers, has acquiring a controlling stake in MG Motor India Private Limited. Zhou Jiang, the Chief Financial Officer of MG Motor India, confirmed on Tuesday that the company is indeed reaching potential investors in India. The main objective would be to secure external funding in India and expand the production capacity of the Indian plant.

In addition to the Indian market, SAIC is also exploring the possibility of entering the U.S. market. It started selling cars in Mexico in October 2020 and established a self-operated direct shipping route to Mexico in March 2023.

When asked about the company’s intentions regarding entering the U.S. market via Mexico, Yu stated, “If there are such opportunities, why not pursue them? Of course, there are considerations.”

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