Cars

SAIC, GM form new biz model

By Li Fangfang (China Daily)
Updated: 2010-08-19 08:13

SAIC workers assemble cars on the firm's Nanjing factory line. [Provided to China Daily]

Firms to jointly develop fuel efficient engines and advanced transmissions

SHANGHAI - China's biggest automaker SAIC Motor Corp Ltd and General Motors Co announced plans to jointly develop fuel-efficient engines and transmissions on Wednesday.

Under the agreement both sides will together develop a new small-displacement gasoline engine family and an advanced transmission, which will be used by GM and SAIC in China and future vehicles worldwide.

Engineering and development of the new engine will be carried out in both Detroit and Shanghai. It's the first time that a Chinese automaker has shared intellectual property rights on powertrain technology with a foreign partner.

"The new power-train systems will hit the market within three years," said Hu Maoyuan, chairman of SAIC. However, he told China Daily that the financial details of the project are still "under discussion".

"The cooperation kicks off a new business model for China's automobile industry," said Hu.

In contrast to the traditional industry standard of being a market for technology, the Chinese auto sector has now been transformed into a market where technologies are shared, said Hu.

"It's a milestone which indicates that SAIC is now on equal terms with foreign automaker in the global market."

The new small engine will feature a compact, lightweight design combining direct-fuel injection and turbo charging. It will be offered in both 1.0-liter and 1.5-liter displacements.

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The new front-wheel-drive transmission will incorporate the latest innovations for improving fuel economy and performance. It will also have a dry, dual-clutch technology, which by itself alone will provide 10 percent better fuel economy over today's conventional six-speed automatic transmissions.

When combined, these technologies can provide up to a 20 percent reduction in emissions, compared to engines and automatic transmissions in production today in China.

"The co-development of these new engines and transmissions builds on a strong history of innovation and collaboration between GM and SAIC," said Tom Stephens, GM vice-chairman of Global Product Operations.

According to Stephens, since 2008, their local joint venture, Shanghai GM, has invested more than $1 billion in research and development as well as production in power-train systems in China. It has launched 10 fuel-efficient engines, two hybrid power-train systems and one efficient transmission.

"In the past five years, GM has reduced the fuel consumption of all our passenger cars here in China by 20 percent, on average," said Stephens.

"In the next five years, GM plans to launch 12 fuel-efficient engines in China, including small-displacement engines."

SAIC and GM started their partnership in 1997.

Through their joint venture, Shanghai GM, both companies have strengthened their capability and expanded rapidly in recent years.

In related news, GM is planning to file a $15 to $20 billion IPO with the US Securities and Exchange Commission next week, according to a Reuters report. SAIC's Hu expressed interest in participating in the IPO if market interest in the float is strong.