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SAIC and Yuejin Group have signed a cooperation agreement, marking a significant step in the Chinese automotive industry. The merged entity of SAIC and Nanjing Automobile (NAC) is expected to produce over 2 million vehicles annually—setting the stage for a new era of competition and collaboration.
The highly anticipated "Shangnan Cooperation" was officially sealed on December 26th at the Great Hall of the People. Shanghai Automotive Group (SAIC) and Yuejin Auto Group, the main shareholder of Nanjing Automobile, signed a comprehensive agreement that will fully integrate NAC's entire vehicle business into SAIC. This merger will create a major player in the domestic automotive market, with an annual production capacity exceeding 2 million units, reshaping the industry landscape in the Yangtze River Delta region.
Under the terms of the agreement, all of NAC’s vehicle businesses—including Nanjing Iveco and Nanqi MG—will be incorporated into SAIC. Assets related to vehicles, parts, and components will be transferred to Shanghai Automotive, a listed company under SAIC control. Other assets such as service trade and parts will go into Donghua, a joint venture between SAIC and Yuejin. SAIC will invest 2.095 billion yuan to acquire Yuejin's auto and parts assets, while Yuejin will hold 320 million shares in Shanghai Automotive and 25% in Donghua.
Due to the signing of the contract, Shanghai Automotive was suspended from the A-share market for one day. During a press briefing before the ceremony, Hu Maoyuan, chairman of SAIC, emphasized that the collaboration aims to meet the demands of international competition in the domestic market. With foreign brands dominating the sector, he said, China's independent brands must innovate and collaborate to gain a foothold. He outlined the principles of cooperation, focusing on "comprehensive integration," and the "five unifications"—planning, R&D, procurement, production, and marketing—to maximize synergy and efficiency across both domestic and international operations.
Despite the merger, Nanjing Auto will retain its legal status, name, and tax structure. Although the partnership isn’t a full acquisition, industry experts believe it benefits both sides significantly. SAIC gains access to key assets like Nanjing Iveco and the MG brand, including 200,000 vehicles, 250,000 engines, and 100,000 gearboxes, which are crucial for its own brand, Roewe. In the future, Roewe may use MG powertrains, enhancing its competitiveness.
With SAIC’s production reaching 1.34 million units last year and 1.5 million units in the first 11 months of this year, the combined output after the merger is expected to surpass 2 million by 2009. This would make SAIC the first Chinese automaker to reach such a milestone, rivaling global giants like Hyundai and Nissan-Renault.
Regarding the branding strategy, SAIC President Chen Hong confirmed that the MG brand will continue to exist alongside Roewe, with each adopting distinct market positions but working together for mutual growth.
In addition, the agreement includes the transfer of 50% of Nanjing Fiat’s shares to SAIC. Both parties have agreed on the equity transfer, with Fiat stepping back from its stake. However, they remain committed to supporting the existing 160,000 Fiat owners through continued technical support and after-sales services. The Nanjing Fiat plant will also serve as a production base post-merger, ensuring a smooth transition and maintaining strong ties in commercial vehicles and parts.
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