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After Bachang took over Changhe Automobile, it finally settled last week. Changhe, who had a “divorced†relationship with Chang’an, eventually got his wish to “re-marry†BAIC, and this “dowry†was abundant. According to the agreement already signed, before 2020, BAIC and Jiangxi State Control will jointly transfer 27 billion yuan to Changhe Auto, which is a huge investment.
Regarding the merger and reorganization that the industry is highly concerned about, the industry has different views. Some people have been struggling for Beiqi's development of the Changhe River. After all, from the perspective of the development in recent years, Changhe Automobile has been shrinking. After the business, Changhe, the veteran micro-car brand, has been forgotten by the market.
Where does Beiqi play against Changhe?
Xu Heyi, Chairman of BAIC Group, which has extensive experience in joint ventures and cooperation, is well aware of the principle that “people who have the hearts and minds of the people†can be found. In the face of the Changhe Auto, which the industry called “the spirit of rebellionâ€, Xu Heyi played a card to appease the army - four “unchanged†rations to 5,000 Changhe people: The reorganized Xinchanghe Company will maintain the legal person. The status remains unchanged, the business entity remains unchanged, the production base remains unchanged, and the Changhe brand remains unchanged.
At the same time, BAIC described a bright future for Changhe: The reorganized Changhe will rely on BAIC and Suzuki to develop a joint venture and independent product system. The products range from B-class cars to mini-vehicles, from cars to SUVs and MPVs. The most important thing is that Beijing Auto gave Changhe enough autonomy. After the reorganization, the main management, technology and development of the new company still depended on the employees of Changhe Automobile. BAIC only dispatched sales and financial representatives to participate in the business of Changhe in the future. What Changan’s most wanted and didn’t get was also the key to Beijing’s eventual acquisition of Changhe.
Beiqi Group also has strategic considerations for Changhe Zhiyi, Xu Heyi and his Beiqi. First, the product lines are complementary. The BAIC Group has more products with a displacement of more than 1.4 liters, and most of Changhe's automobiles are small displacements of less than 1.4 liters. There is no conflict between the two and the products are highly complementary. Second, regional complementarity. In the past, the major markets and network channels of BAIC Group were more north than south, and from the perspective of industrial layout, it was the need to expand BAIC Group's presence in the southern market. Third, Beiqi is conducive to the goal of becoming bigger and stronger. This year, BAIC Group's production and sales volume is expected to reach 2.1 million, and it will enter the first echelon of the Chinese automobile industry as soon as possible. The reorganization of Changhe Automotive is critical for BAIC to form a scale advantage as quickly as possible. The state encourages merger and reorganization of the automobile industry and allows BAIC to merge smoothly with Changhe.
This year's merger and reorganization of BAIC Group took a drastic move in the domestic market. In August of this year, the People's Government of Zhenjiang City signed a strategic cooperation framework agreement in Nanjing. The East China Base has settled in Zhenjiang City, Jiangsu Province, with a total planned investment of 15 billion yuan; on October 26th, The BAIC Yunnan Industrial Base (Ruili) cooperation agreement was signed in Kunming with a total planned investment of 3.6 billion yuan. On November 19th, it signed with Daimler on the full-scale strategic cooperation delivery document, and it has entered a substantial new cooperation period. In addition, the Changhe Automotive Huaqibeiqi. Xu Heyi's development strategy of “go together†will support Beiqi’s goal of achieving the first echelon of the domestic auto industry by achieving a vehicle production capacity of 4 million units and a total operating revenue of RMB 450 billion in 2015.