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UPDATED: March 10, 2009 Web Exclusive
Crisis Had No Major Influence on SAIC Motor
SAIC Group is still going strong despite the sales slump in the international auto market and decreased domestic output

Shanghai Automotive Industry Corp. Group (SAIC Group), China's leading automaker, is still going strong despite the sales slump in the international auto market and decreased domestic output, company president Chen Hong told Beijing Review. Chen made those remarks on the sidelines of the Second Session of the 11th National People's Congress.

Chen said that compared with international auto sales, the Chinese market has maintained stable development. In January, auto sales in the United States plummeted 38 percent year on year, while the European market dipped 27 percent; auto sales in Japan and South Korea were also down about 20 percent. In the first quarter of 2008, which was a peak time for auto production, output in China surged 22 percent year on year. Therefore, he expected auto output in the first three months of 2009 to decline compared with that of 2008. But Chen said the range of decline would be minimal, less than 4.7 percent--"which is relatively good, considering the performance of other markets."

Chen said SAIC Motor sales in January and February were above the national average, growing an aggregate 7.6 percent year on year.

Since last year, the government has adopted a string of policies to shore up the domestic auto market. These include reducing refined oil prices, canceling road maintenance fees and reforming the fuel pricing mechanism. In particular, the State Council, China's Cabinet, approved a revitalization and readjustment plan for the auto industry. The plan halves the purchase tax on cars with low emissions and offers subsidies to farmers buying a motor vehicle.

"This is all good news for reviving the domestic auto market, and also helps boost consumer confidence," Chen said.

Chen said SAIC Group would seize the opportunity in the swift market change to embark on independent branding.

It has been reported that last year SAIC Motor debuted several cars with independent brands. A total of 36,000 motor vehicles with independent SAIC brands were sold in 2008, a 120 percent increase from 2007.

On January 14, the State Council passed a preliminary revitalization and readjustment plan for the auto industry. Under the plan, the government will cut the purchase tax on cars with small engine displacements (less than 1.6 liters) from 10 percent to 5 percent, effective from January 20 until the end of 2009. The government will also set aside 5 billion yuan ($730 million) to subsidize farmers who discard their used high-emissions vehicles and buy autos with engine displacements of 1.3 liters.


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