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Chinese carmaker unveils 1st vehicle under own brand

Shanghai Automotive is seeking a niche for the high-end Roewe in China and Europe.

October 25, 2006|From the Associated Press

Shanghai Automotive Industry Corp., the local partner of global giants General Motors Corp. and Volkswagen, officially launched its first branded car, the Roewe, on Tuesday.

The high-end sedan was built by state-owned Shanghai Automotive using technology from Rover. The Chinese company owns the technology rights for two Rover models, the 25 and the 75, bought last year from Britain's MG Rover Group Ltd.

The Roewe 750 -- Shanghai Automotive lost out to Ford Motor Co. in its bid for the Rover brand name -- was presented to VIPs and domestic media in a ceremony in Shanghai's western suburb of Anting, which aspires to become China's version of Detroit.

Shanghai Automotive is hoping to use Rover's reputation to gain a niche for the Roewe in the Chinese and European markets. In China, the car will also be marketed as the Rongwei, which means "glorious power."

Government vehicle purchases once accounted for virtually all auto sales in China but these days make up 15% of the market, according to state media reports.

The Roewe is a far cry from the old Red Flag sedans traditionally used by Communist Party dignitaries, according to Shanghai Automotive's description.

The wide-bodied sedan has leather seats and Goodyear tires and can go as fast as 135 mph. The company has an initial target of 600,000 branded vehicles a year by 2010. It eventually plans to boost production to 2 million units.

Opinions are divided about the potential for Shanghai Automotive -- a latecomer to the market despite its domestic roots and ties to Detroit-based GM and Volkswagen of Germany -- to break into the increasingly crowded Chinese passenger car market.

From the low end to the high, virtually all the world's biggest automakers have been putting billions of dollars into ramping up production.

"I think it will be really hard for Roewe to find a niche in the market. I don't think it will do well in the local market unless there is a big purchase from the government," said Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing.

"They'll have a hard time setting a price," he said of Shanghai Automotive's marketers. "If the price is too low, it won't suit the product's so-called high-end image. And if it's high, their target customers have lots of choices among international brands."

Yale Zhang, a Shanghai-based auto analyst with CSM Worldwide, had a more positive view: "In China, there are only two local companies who can enter successfully, FAW Group and SAIC. These two companies have the longest history in China's automotive industry."

China FAW Group Corp., a partner of Toyota Motor Corp. of Japan and Audi of Germany, plans to introduce a revamped version of the Red Flag, or Hongqi, at the Beijing Auto Show next month, the state-run newspaper Shanghai Daily reported Tuesday.

FAW said it would target the sedan, dubbed the HQ3 and based on Toyota's Majesta, at government purchases of high-end model cars, a segment dominated by German brands Audi, Mercedes-Benz and BMW.

FAW is also developing a bulletproof model, it said.

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