How Subaru Lost its Joint Venture in China

Marvin Zhu

A year ago, Fuji Heavy Industries, as well as several other global carmakers, chose not to locally produce vehicles in China. Fuji Heavy was said to be seeking a local partner to establish a joint venture. According to rumor, Great Wall, well known for its SUVs, was one possible candidate, as Subaru’s most popular model in China is also an SUV—the Forester.

Beijing Auto (BAIC) was also closely linked because the company needed to expand its product portfolio to compete against other state‐owned giants, such as SAIC, FAW and Dongfeng. In addition, some smaller players—such as Huatai,Youngman and several others— were also mentioned.

However, it was eventually revealed that Chery was the last remaining company in the running to partner with Subaru. A JV would use Chery’s new plant in Dalian to make the first model, which was likely to be the Forester. Chery could learn a lot from Subaru’s engine technology, and might even develop a new brand based on the new technology.

Unfortunately, according to a recent announcement from Fuji, the company has dropped plans to manufacture vehicles in China, after failing to secure the Chinese government’s approval for a joint venture. Since then, Fuji Heavy cut its global sales targets and instead decided to increase its manufacturing capacity in the United States and in Japan. Continue reading ›

Partners in China: A Perspective on EV Joint Venture for GM and SAIC

Tim Dunne

The complicated pas-de-deux carried on between General Motors and Shanghai Automotive Industry Corp. (SAIC)* in China may have gotten just a little more complex.

The two companies, which already operate 10 automotive-related joint ventures together, added an 11th JV company to their stable on Tuesday, September 20. This new JV was entered into specifically to develop electric cars in China. The new electric vehicles (EVs), according to General Motors, will not be based on the proprietary technology developed by GM for its Chevrolet Volt extended-range electric vehicle, or based on its Sonic small-car platform.

The EVs will be designed at GM’s Pan Asian Technical Center (PATAC) in Shanghai, another GM and SAIC joint venture. Who gets the new electric vehicles—and how they will be branded—was not announced. Continue reading ›

Ashok Leyland and Nissan Take on Light-Truck Market in India

Darius Lam

The rapid growth of the Indian economy during the past few years has led to an exponential increase in demand for light trucks. This is particularly true for mini trucks like the Tata Ace, which practically created the mini truck segment when it was launched a few years ago. During 2010, sales of light trucks in India increased by more than 39%—to 529,000 units, and mini trucks contributed 156,000 units to this volume—an increase of 57%.

We are projecting that during 2011, light-truck sales will grow to 630,000 units—an increase of 19% over 2010. Of these sales, mini trucks are expected to make up 203,000 units, which would represent an increase of 30% over 2010. The main reason for this spurt in demand is the move toward the hub-and-spoke distribution model.

Mini Trucks Create Niche in India’s Light-Truck Market

This is a massive structural change that is taking place within the industry. Earlier medium trucks, weighing 12-16 tonnes (metric tons*), moved goods to their final destination. However, as the Indian highway network improves, demand has moved away from medium trucks and toward both heavier and lighter trucks. Continue reading ›

Sharing Brands in China Has Benefits and Drawbacks

Tim Dunne

Sharing a joint brand* with a major domestic automaker in China is a way for General Motors to target buyers at a lower price point without hurting the company’s international image for producing higher-end vehicles, according to a recent news report in The Wall Street Journal. However, unlike the old joint venture (JV) approach, the joint brand means that intellectual property is held in common with the Chinese partner.

In the same article, an expert on the Chinese automotive industry said that in the long-run, this joint branding may not be good news for GM and other foreign joint venture automakers because China has made it clear that it wants its own national manufacturers to dominate the domestic market. Continue reading ›