Shanghai Automotive Industry Corp (SAIC) has received government approval to start producing cars of its own design in its new manufacturing company, despite a possible production suspension due to a looming oversupply in the domestic auto industry.

 

The new company, SAIC Motor Manufacturing Co Ltd, located in Yizheng City, Jiangsu Province, is designed to be the major platform for SAIC to carry out its ambitious plan on self-designed models featuring Rover technology, according to anonymous sources yesterday.

 

The approval came two months after the National Development and Reform Commission suspended production in 13 auto manufacturers, including SAIC Motor, due to looming overcapacity of the Chinese auto industry.

 

The SAIC Motor license is one of the first approved by the central government body after it shut down 142 smaller automakers to better allocate manufacturing resources and rein in excess capacity.

 

SAIC started the groundwork in 2004 when its president Hu Maoyuan laid out aggressive plans for developing its home brand models.

 

The automaker aims to produce 600,000 of its self-designed cars by 2010, including 200,000 self-designed passenger cars and 400,000 commercial cars with investment totaling 1 billion yuan (US$123 million). At the end of last year, the automaker invested 1.8 billion yuan to rebuild its engineering research institution.

 

The first model, a new generation Rover 75, is expected to roll out in September, ahead of its competitor, Nanjing Automobile Industry Corp, which last year paid 53 million pounds (US$63 million) for most of MG Rover's assets.

 

(Shangahai Daily February 22, 2006)