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Xu Liuping to the rescue at FAW: sweeping reform ahead for the industry’s “eldest son”

The chairmen “swap” two years ago between China’s two centrally administered state-owned automakers – Dongfeng Motor Corp. and FAW Group – was aimed at preventing corruption that plagued both companies.

The similar “swap” between Chang’an Automobile Group parent China South Industries Group and FAW Group early this month, however, has the objective of putting a proven executive at the helm of the industry’s “eldest son” in dire need of sweeping reform to rejuvenate its independent brands.

That executive is Xu Liuping, former chairman of China South and Chang’an, who was appointed by the State Council as the new chairman and Party secretary of FAW Group on August 2 after several days of rumors. He swaps positions with Xu Ping, who was involved in that famous chairmen “swap” in 2015 that put him in charge of FAW Group, switching places with former FAW Group president Zhu Yanfeng, who became chairman of Dongfeng.

Xu Liuping, at just 52 years old, is at his prime and is well known in the industry for elevating Chang’an’s independent brand into prominence over the last few years. Chang’an ranks fourth behind FAW in overall group sales, but second in Chinese brand vehicle sales, well ahead of FAW. He is also much more outspoken than Xu Ping, who at near retirement age provided the stability at FAW over the last two years in a transition role (in retrospect) via a low-key leadership style. Their personalities are as much different as the Chinese brand performance at the two companies.

Which is the immediate and biggest challenge confronting Xu Liuping: FAW ranks seventh in independent brand vehicle sales, and outside of the top 10 in independent brand passenger vehicle sales behind 10th place Brilliance, based on first half 2017 sales data. The proportion of Chinese independent passenger vehicle sales among group vehicle sales at FAW is a mere 7 percent, compared to 45 percent at Chang’an. FAW, dubbed as the “cradle” of China’s auto industry, has never lived up to that billing as far as its independent passenger vehicle brands are concerned: the Red Flag, Besturn and Xiali brands are all in a funk despite brief prominence at various times of their history. FAW has the worst independent brand performance (with the exception of the FAW Jiefang commercial vehicle brand) among leading state-owned automakers in China and over the last few years was more mired in corruption scandals than product successes.

The industry, as well as many employees at FAW, seems to be looking forward to Xu’s stewardship to see if he can transfer the same success he had at Chang’an to FAW: putting the namesake independent brand on at least the same par as the group joint venture brands, if not more.

He will have his work cut out for him. It will be interesting to see what kind of “medicine” the young chairman will prescribe for FAW to cure its “illness.”

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