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With seven new VPs, SAIC starts the Chen Hong Era

Shanghai Automotive Industry (Group) Corp. (SAIC), China’s largest automaker by sales and revenues, starts a new era under Chairman Chen Hong with the recent appointment of seven vice presidents.

The announcement was made public quietly in the form of a notice on August 13, 2014. It was posted on an information board outside of a dining hall in the SAIC Building.

The new VPs and VP-level executives are Wang Xiaoqiu, Zhang Hailiang, Shen Yang, Lan Qingsong, Cheng Jinglei, Zhong Lixin, and Chen Weifeng. This is the first and largest management reshuffle since Chen Hong became the chairman and Chen Zhixin the president, especially with the retirement of several former VPs.

According to the announcement, Wang Xiaoqiu, former president of Shanghai-GM, will head SAIC’s independent passenger vehicle unit in charge of the Roewe and MG brands. Zhang Hailiang was president of Shanghai-Volkswagen and Shen Yang will continue to head SAIC-GM-Wuling (SGMW). Lan Qingsong, former president of SAIC MAXUS will be in charge of SAIC’s commercial vehicle business, replacing retiring Xiao Guopu.

The CEOs of SAIC’s five leading whole vehicle affiliates have all been promoted to the group level except those for the other three commercial vehicle companies, NAVECO, SAIC-IVECO-Hongyan and Shanghai Sunwin Bus.

Cheng Jinglei, former deputy chief engineer and director of strategy and planning, is promoted as VP-level chief engineer. Similarly, Zhong Lixin, former assistant to SAIC president, is promoted as SAIC Labor Union director, and Chen Weifeng as director of the Office of Ethics and Compliance. Together with President Chen Zhixin, the seven new vice presidents are expected to assist Chen Hong in the group company’s new era after Hu Maoyuan.

 

Independent branding

SAIC’s executive shuffling under Chen Hong and Chen Zhixin is meant to give more emphasis on technology innovation and local brand building. In 2013, SAIC sales of own-brand passenger and commercial vehicles were less than 8 percent of the total sales. Shanghai-GM president Wang Xiaoqiu’s return to SAIC Motor Passenger Vehicles is seen as a major corporate move to support SAIC’s independent passenger vehicle brands.

In the commercial vehicle business, Lan Qingsong has successfully led SAIC MAXUS to achieve a high growth rate of 85.8 percent so far in 2014 and realize the yearly sales target in seven months. In only two years, MAXUS products have achieved 10.8 percent of the market share from zero.

Shen Yang has led the legendary SGMW into the country’s No. 1 in microvans and small MPVs. In the first six months of 2014, Wuling sold 890,950 new vehicles, an increase of 11.3 percent over the same period of last year, even national sales of micro vehicles have declined. Its commercial vehicle sales have surprisingly increased by 56 percent. Wuling’s successful strategy has been to leverage its 10 million customer base to launch new products in meeting their practical needs.

Lan Qingsong and Shen Yang have recently met to discuss possibilities of collaboration between MAXUS and Wuling in the commercial vehicle area. The ideal is working together within SAIC to see if Wuling’s high-end customers may turn to MAXUS and MAXUS’s customers to the GL8. Wuling’s 2,600 dealers around the country are definitely potential channels for SAIC to grow its independent brands.

Despite SAIC’s total sales of 5.15 million in 2013 and a high 9 percent dividend payout to shareholders, sales of its four commercial vehicle companies, SAIC MAXUS, Shanghai-IVECO-Hongyan, NAVECO and Sunwin Bus totaled only 170,500 units, falling far behind Dongfeng Motor’s 559,200 and FAW’s 269,500 units.

To beef up SAIC’s commercial vehicle business, SAIC has decided to invest ¥3 billion ($492 million) in developing new vehicle models including SUVs, pickup trucks and new energy vehicles. With the investment, SAIC hopes to pressure its foreign partners into introducing the latest technology and products to its commercial vehicle joint ventures. In the case of NAVECO for example, sales of IVECO light buses in the first six months were down by 0.7 percent. This was in sharp contrast to the high growth in sales of the MAXUS light buses.

(Rewritten by Kelly Zhang based on author’s article published in 21st Century Business Herald)

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