Disgraced Duo: China's SAIC Soon Bigger Than GM And Ford Together
Ouch, that hurts, or “tong, tong!” as they say in China. “China’s largest automaker, SAIC Motor Corp, is poised to surpass the combined market value of General Motors Corp. and Ford Motor Co.” Bloomberg followed the market capitalization of the three automakers as far back as the year 2000. Then, Ford and GM were worth $100b, about 50 times the value of SAIC. At the end of last week, the difference shrunk to a mere $570m. As the stock of both GM and Ford are twirling further down the toilet, the Shanghai auto maker will soon be bigger than both former Detroit giants together. Says Bloomberg: “GM most recently traded at $3.01 per share in New York Stock Exchange composite trading and Ford was at $1.80, for a combined market value of $6.14 billion. SAIC shares ended the week at 5.8 yuan (85 cents), for a value of $5.57 billion.” Want some background?
The Shanghai Automotive Industry Corporation (SAIC) began as the state-owned Shanghai Tractor Automobile Corporation. In 1984, the company entered a joint venture with Volkswagen, initiated by Carl Hahn, formerly head of Volkswagen of America. They built the Santana and became the cradle of China’s mass-motorization.
A decade later, SAIC entered a joint venture with General Motors, much to the “dismay” ( Herald Tribune) of their German partner. However, the polyamorous relationship survived. Two years ago, SAIC shocked both their German and their American boyfriends by announcing that they would produce their own cars in China, and that they would even export them to Europe. The latter has not happened. Yet.
In 2007, SAIC bought the Nanjing Automobile Corporation, which had acquired British MG Rover in 2005. However, in a replay of the Volkswagen/Rolls Royce trademark slugfest, BMW successfully claimed ownership of the Rover brand, which was eventually sold to Ford as part of the Range Rover deal. SAIC launched an updated Rover 75 as the Roewe 750. Roewe (in pinyin “Rongwei”) is pronounced similar to the British pronunciation of “Rover.”
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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@Michael: The Chinese stock market is down 70% stince Jan.
SAIC would probably be worth a lot more if the Chinese stock market wasn't down 70% this year. That whole "decoupled from the American stock market" theory didn't hold any water, turns out. I'm still sure that GM and F shouldn't get bailed out for the simple reason that at market capitalizations less than $5B no one's interested. If either company was really that well-run, someone would have bought them a long time ago.