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Chen Hong: SAIC should reflect on how to develop independent brands

SAIC’s sales decreased by 4.51 percent in May. The total sales of its independent brands Roewe and MG plummeted 34 percent from January to May, according to huiche.com.

SAIC chairman Chen Hong attributed the poor performance to five factors at a shareholders meeting on June 18.

Firstly, SAIC’s independent brands target at the mid- to high-level cars, a segment highly competitive.

Secondly, the experience SAIC has learned from its joint venture operations is not enough to boost the company’s independent brands because of the much weaker brand influence. More innovations are needed to boost the value of independent brands.

Thirdly, unlike its foreign competitors, SAIC does not have a comprehensive line of products covering all market segments.

Fourthly, SAIC has misjudged market trend on certain products. For instance, the company mistakenly believed that compact SUVs, without off-road capability and four-wheel drive, were not real SUVs and therefore would not have significant market demand. But the reality has proven it wrong.

Lastly, sales of new energy vehicles will not be profitable in the next few years due to the lack of charging infrastructures. With government support, a rapid growth of NEVs may happen around 2018.

Responding to a shareholder’s sharp complains that that SAIC Motor (600104) is now the worst performing automotive stock and has become a junk, Chen denied the accusation and said that the shareholder is welcome to liquidate the stock if he so believes.

According to Chen, despite all the challenges, SAIC will continue to target the mid- to high-level car segment for its independent brands. He also told investors that SAIC would debut 13 new vehicles in the next 18 months, including four new energy vehicles.

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