QINGHE, Hebei – Great Wall Motor Co., Ltd. plans to acquire a 25 percent stake in Yogomo Automobile Manufacturing Co., Ltd. in cash with the stake possibly increasing to as high as 49 percent, based on a joint venture framework agreement signed by the two partners here on July 15.
In the future, Great Wall and YGM are also expected to jointly launch a new brand possibly with a “YGM-Great Wall” trademark.
The cooperation between YGM and Great Wall is expected to provide strong support for the overall improvement of YGM’s brand and product quality and its target of selling 150,000 new energy passenger vehicles in 2020.
For Great Wall, the move is expected to alleviate its pressure on meeting the tough CAFC+NEV “dual credit” requirements that will go into effect in 2018, which requires automakers to sell enough battery electric or plug-in hybrid vehicles to generate enough NEV credits equivalent to 8 percent of sales. That percentage will further increase to 10 in 2019 and 12 in 2020.
Great Wall said in a statement released on July 16 that the positive CAFC credits generated by YGM will be directly transferred to Great Wall at no cost while positive NEV credits generated by YGM will be sold to Great Wall on a priority basis. The company has been behind other Chinese brands in NEV production and sales despite leading the industry in SUV sales.
Through nine years of development efforts, YGM has enjoyed high reputation as a leading low-speed electric vehicle manufacturer. The company obtained qualification to produce new energy SUV, MPV and other passenger vehicles in 2014.
Zhang Liping, chairman of YGM, emphasized that the Chinese and global NEV industries are converging and the vehicle is transforming from a simple transportation tool into a large mobile terminal. Vehicle production is currently experiencing an evolution from the past model of mass production to intelligent manufacturing system of connected cooperation, which indicates the vehicle industry ecology is being reshaped. Under this trend, the cooperation between YGM and Great Wall is of great significance.
“Great Wall founder (and chairman) Wei Jianjun is a legend and pride of China’s national auto industry. His entrepreneurial and craftsman spirit and focus is a role model for YGM and the industry,” said Zhang.
“We have finally reached this framework agreement after a lengthy discussion. After seeing YGM’s manufacturing facility and its products, I am more confident and determined in our cooperation. Through this cooperation, Great Wall will provide the most advanced technology to YGM in order to maximize value to the joint venture company,” said Wei after test driving YGM’s E-Xing and EX50 small battery electric SUVs. The EX50 in particular is an A0-class SUV with a top speed of 150 km/h and 0-50 km/h acceleration time of only three seconds.
The EX 50, in fact, just appeared on the latest batch of the Catalogue of Road Motor Vehicle Manufacturers and Their Products published by the Ministry of Industry and Information Technology (MIIT) on July 17.
Great Wall sold more than 460,000 vehicles in the first half of 2017, up 2.33 percent year-on-year. Nearly 400,000 units of those were Haval SUVs.