While China has achieved a staged victory in the fight against the epidemic, the automobile industry, as a pillar industry of China's economic and social development, adopts counter-cyclical thinking, changes with the trend, follows the trend, seizes opportunities, and seeks new growth points in the "new infrastructure" , New breakthroughs, new innovations.

According to data from China Association of Automobile Manufacturers, from January to November 2020, China's heavy truck market achieved cumulative sales of 1.51 million vehicles, an increase of 39.5% year-on-year. Since the second quarter, the sales of heavy trucks have been on the rise. The monthly growth rate has always been above 17%. At the peak of the year, the growth rate was 63.1%. It has set a monthly sales record for eight consecutive months. The annual sales of heavy trucks are expected to exceed 1.8 million. The annual sales of commercial vehicles are expected to exceed the 5 million mark. In addition, according to statistics from the China Internal Combustion Engine Industry Association, the total domestic sales of various types of diesel engines from January to November 2020 was 5,740,700 units, a year-on-year increase of 17.83%. Judging from the sales data of domestic heavy-duty trucks and diesel engines, the overall development of the industry in 2020 is at an important point.

Shangchai welcomes new strategic positioning of "heavy truck + engine"

In the face of the "wind", Shanghai Diesel Engine Co., Ltd. (hereinafter referred to as "Shanghai Diesel Engine Co., Ltd.") seized the historical opportunity and disclosed the reorganization plan on the first trading day of 2021. SAIC Motor intends to purchase 50% equity of SAIC-IVECO Commercial Vehicle Investment Co., Ltd. (hereinafter referred to as “Shanghai”) and SAIC-IVECO Hongyan Commercial Vehicle Co., Ltd. (hereinafter referred to as “SAIC”) by way of issuing shares. "Red") 56.96% of the equity; purchase 34% of the equity of Shanghai Yihong and Shanghai Philippine Red SAIC Fiat Hongyan Powertrain Co., Ltd. (hereinafter referred to as "Shanghai Philippine Red") 10% from Chongqing Electromechanical by issuing shares Equity; Shangyi Investment purchased its 9.04% stake in Shangyihong by paying cash. At the same time, supporting funds are raised. This transaction is expected to constitute a major asset restructuring and related party transaction.

It is worth mentioning that after the completion of this reorganization, Shanghai Diesel will form an integrated development layout of "heavy truck + diesel engine". The heavy truck business will be built on the platform of Shanghai Yihong, which is wholly-owned after the completion of this transaction. A leading company in the field of commercial vehicle heavy trucks. The diesel engine business will continue its position as a leading independent supplier in multiple fields in China, and provide technologically advanced products for domestic and foreign customers of commercial vehicles, construction machinery, agricultural machinery, small and medium-sized ships and generator sets.

Under the “integrated” layout, the synergy will continue to expand

According to industry professionals, “the heavy-duty truck market is now a seller’s market. At this time, excellent companies can demonstrate the capabilities of the entire system.” This major asset reorganization is a manifestation of the further improvement of the industrial chain layout of Shangchai. According to the plan, Shangyihong, the target asset of this reorganization, is a leading domestic heavy-duty truck manufacturer, and has good business linkage and strategic synergy with the listed company and the target asset Shangyihong diesel engine business.

Second, in order to further enhance the competitiveness of SAIC diesel engine products, SAIC Motor will integrate the high-quality diesel engine assets of SAIC and its industrial partners. Specifically, the target asset of this reorganization, Shangfeihong, was jointly invested and constructed by SAIC and IVECO, a joint venture established by SAIC, Chongqing Electromechanical and FPT. The company is mainly engaged in the design, development and production of diesel engines and their parts , Assembly and sales, is one of China's leading diesel engine manufacturers, and also the promoter of China's high-tech, low-emission diesel engines. Relying on deep technical reserves, SFH has reached the international advanced level in terms of product power, reliability, and safety.

At present, the vertical integration of the industrial chain of heavy-duty trucks and diesel engines has become the mainstream business model of the industry. Diesel engines are the key components that determine the reliability and economy of heavy-duty trucks, and their value accounts for a relatively high proportion of the entire vehicle. It promotes the vertical industrial chain of heavy-duty trucks and diesel engines. Integration and creating a business layout for the coordinated development of heavy-duty trucks + diesel engines will help improve the operational efficiency and competitiveness of Shanghai Diesel. At present, most of the domestic mainstream heavy-duty truck OEMs have established independent supporting engine supply chains through independent research and development or introduced technologies to ensure the supply of core components; at the same time, some leading engine companies have invested in and controlled heavy-duty truck OEMs. Build a full industrial chain of "powertrain (engine, gearbox, heavy-duty axle) + heavy-duty truck" to give full play to the overall competitive advantage.

In the future, Shanghai Diesel will continue to take advantage of the “new infrastructure” and continue to actively strengthen and improve its diesel engine business based on its good business linkage and strategic synergy and further improvement of its industrial chain layout. , Expanding and realizing the business of Shangchai Co., Ltd., promote the realization of high-quality development of Shangchai Co., Ltd., and realize the preservation and appreciation of state-owned assets. Editor/Xing Wentao