China’s SAIC is basking in the glow of another bang-up quarter. China’s biggest automaker told Reuters that their first-quarter net profit rose more than four times from the year-ago result. Detailed numbers will be released with SAIC’s full first-quarter earnings report on April 28. Keep in mind that last year’s results already were 9 times those of 2008. In March, SAIC sold 336,387 units, sales for the first quarter were up 64 percent from a year earlier to 891,795 units. To put it into perspective: All of Germany sold 670,410 cars in the first three months of 2010. SAIC singlehandedly outsold Germany by 221,385 units.
SAIC is a joint venture partner of China’s two best-selling brands, Volkswagen and GM. SAIC also builds home-grown cars, and cars based on acquired Rover/MG technology.
Speaking of GM, SAIC completed this week a small share right restructuring in the joint venture with GM. SAIC Motor Corp has acquired an additional 1 percent stake from Shanghai GM for a paltry sum of $84.5m. With 51 percent on their side of the shareholder list, SAIC is now the majority stockholder in the joint venture.
The move allows SAIC to book the profit from the joint venture on SAIC’s income statement, reports Gasgoo. Nevertheless, we bet you yuan to spring rolls that GM will continue bragging about the profit in China, and will stick with the dubious practice of counting all Chinese sales, especially those in the minority owned SAIC-GM-Wuling joint venture as theirs. They already did.
While publicly traded, SAIC is government owned. Shanghai GM now has the dubious honor of being owned by two governments: China’s government 51 percent, U.S. government 49 percent.
“Shanghai GM now has the dubious honor of being owned by two governments: China’s government 51 percent, U.S. government 49 percent.”
A presage of things to come…
In communist East Germany people had to be on a 15-year waiting list for a new car. I’m sure GM would be happy to have such demand exceeding supply. Of course, having a wall around the country and shooting everyone trying to leave (for better cars, among other things) helped funneling the demand for government produced cars.
But a wall around costumers can be arranged. Tariffs on tires are just the beginning. Shooting everyone trying to buy a foreign car can be arranged too. We already did warning shots with Unintended-Acceleration-fever. Next time we won’t use blanks anymore.
@HerrKaLeun: Actually I think it’s about time for the US government to do something so American companies can compete fairly with their Japanese counterparts, who have been backed by the Japanese government since they’ve been founded. Same for the Koreans. Ask our trade “partners” how many American cars have been sold on their shores.
Analyst: Half of the U.S. car purchases in March were Japanese or Korean. If Americans desert their own en mass, does it surprise you that next to nobody wants American cars in Japan or Korea? As a whole, American cars are not an export hit.
I’m not familiar with the Korean market, but I am with the Japanese. Please name the import restriction against American cars to the Japanese market.
I can tell you one: They don’t sell there.
There is no trade barrier for American cars. The barriers are expectation of quality and gas prices, but not a legal barrier backed by Japanese or European governments. US manufacturers got a lot of backing: cheap gas prices that helped sell profitable SUVs and trucks, non-standard (compared to the rest of the world) safety, emission rules etc. If you baby a company too much, it will be too weak as seen here.
and how do you define an American company?
– Place of production: Toyota/Honda then would qualify, more than GM etc. None of the major US-sold Japanese cars comes from Mexico.
– Owners: all publicly traded, the owners could be anywhere from the middle East to Scandianvia (well, in case of GM and Chryco all inhabitants of the US were forced to be owners)
– Headquarter: all manufacturers have semi-independent headquarters in their major markets, GM in Europe, in Asia etc.
– where is tax paid? Again, place of production etc.
– and yes, GM and Ford produced a lot of patriotic weapons during WWII, but so they did for the Germans. The only American thing about that is the sense of opportunity to make money :-)
Beyond the obvious quality and gas mileage issues – most of the product is just not well suited to the Japanese market.
Practically speaking, do want to park an Excursion in Tokyo?
More importantly, do you really wish to been seen not just as gaijin, but as bugaisha?
Perhaps the odd ‘Vette or collector car would be seen as acceptable, but I don’t see an F350 dually driven as a commuter making you any points with your Japanese hosts.
(Bertel, thoughts?)
Especially if you wish to do business with them.
Exactly.
There is the occasional nut who buys, say, a pink Cadillac. But even the Yakuza won’t be caught dead in an Escalade or Mustang. They drive Benz or Bimmel …
By the way, the US government doesn’t own GM (at least not 100%).
GM ownership:
United States Department of the Treasury (61%)
United Auto Workers Union
Voluntary Employee Beneficiary Association (17.5%)
Crown in Right of Canada (7.9%)
Crown in Right of Ontario (3.8%)
Bond holders of Motors Liquidation Company (9.8%)
“and how do you define an American company?”
It doesn’t matter if the Camry is produced here, that it’s “90% American,” etc. I (and most people) would never call the Camry an American car. Toyota is a Japanese company, period. A large chunk of the profits goes to Japan.
Let me get this straight. The U.S government ,for all intents, and purposes, owns G.M. right? GM in turn owns 49% of Shanghai GM OK? As I understand it,the U.S. government would very much like to git rid of thier GM ownership via an IPO. As would the UAW and the Canadian and Ontario governments.
With the Chinese auto market booming,does this not make the IPO that much more appealing?
Even SAIC’s own brands are beginning to thrive right now. SAIC have shipped 100,000 Roewe 550’s since launch. That may not sound impressive until you realise it’s only been on sale for about 6 months or so and Roewe is starting from 0 sales.
Man, with China’s auto industry growing like crazy, I’m beginning to think there have been some changes in China since Pearl S. Buck wrote “The Good Earth.”
There aren’t direct restrictions (anymore), but they have undervalued currencies, high gas prices (high gas tax), inspections, taxation, etc. which makes American cars prohibitively expensive and otherwise hard to sell.
The ratio of American cars exported to Japan to Japanese imports here is close about 1:400. That is no accident.
What have you been smoking?
The Yen is undervalued? Have you ever been to Tokyo with dollars in your pocket? You’ll bee poor in an afternoon. The Yen is hopelessly overvalued. Which actually (Forex 101) is good for imports, because it makes imports cheaper.
High gas prices, inspections, taxation, etc. apply to everybody else just the same.
What you are saying is what’s the truth: An American car is simply not competitive in that market. European cars do a little better in Japan. Not a run-away hit, but market share of Japanese cars in Europe is likewise limited.
The insignificant number of US cars in Japan is no accident, because nobody wants them. Not highly popular in Europe either. Chevrolet market share Germany 0.9% , Chrysler, Jeep, Dodge 0.2%
I’ll concede that American cars are not competitive in Japan, but I think the under/overvaluation of the Yen is debatable.
And I forgot to mention on my original post, but the Japanese government has (historically) supported its auto industry directly and indirectly, which is one the reasons I found it funny that when the US bailed out GM and Chrysler there was a huge fuss.
The Japanese government has loaned money to their automakers since they’ve been founded.
I live in Tokyo and am European. My wife is Japanese. I would never buy a U.S. car here but it is nothing to do with the cost or import restrictions. They just don’t offer attractive cars here in either cost or style terms.
If I want a fuel-efficient, practical small car there are dozens of better Japanese choices. If I (or my wife) want something a bit more stylish, then it is the European brands: I’d get a BMW 1-series, Audi A3, or even Alfa 147, which seems popular here (actually, we’d wait for the new Guilietta). If I want something larger, the same European brands would appeal–perhaps one of the dozens of sporty wagons available here.
The U.S. brands, though, just don’t cut it. Occasionally, I see Cadillacs here and am appalled by the styling. I like some of the European Ford models but, having grown up there, they don’t stand out for me. I’d rather get the Mazda. My wife, meanwhile, has zero interest in U.S. brands. Cars in Japan tend to be either a luxury good (which means European) or a practical economic runaround (kei cars or small cars, which means Japanese).