China’s Fifth-Richest Man Wei Jianjun of Great Wall Motor Targets to Sell More SUVs Than GM’s Jeep

June 1, 2013 Leave a comment

China’s Fifth-Richest Man Targets to Sell More SUVs Than Jeep

Chinese billionaire Wei Jianjun has set a target for Great Wall Motor Co. (2333)’s Haval marque to surpass Chrysler Group LLC’s Jeep and become the world’s best selling SUV brand in three to four years. As part of the plan, Great Wall’s chairman has started construction of a new research center the size of 35 soccer fields in the city of Baoding, about 160 kilometers (100 miles) from Beijing. He plans to increase the number of engineers by at least 40 percent to more than 10,000.“We want Haval to have the highest value for money,” Wei, who is China’s fifth-richest man with an estimated net worth of $6.6 billion according to the Bloomberg Billionaires Index, told reporters today at the company’s factory in northern Hebei province. “We want to surprise our customers by that instead of just satisfying them.”Great Wall posted record profits last year, helped by a 90 percent surge in SUV sales as increasing numbers of Chinese consumers sought more space than conventional sedans can offer. To achieve his goal, Haval will have to surpass Jeep, which sold more than twice as many SUVs last year, according to data from the companies.

“Great Wall’s growth trajectory has been pretty impressive,” said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia. “That said, it looks a bit optimistic to want to be the biggest SUV brand in the world, especially since it doesn’t have a presence in the U.S., which is one of the biggest SUV markets in the world.”

Great Wall currently sells its SUVs mainly in emerging markets and would need to step up their presence in Europe and the U.S. in order to achieve the goal, he said.

SUV Demand

In China, competition in the country’s fastest-growing vehicle segment will also increase as Jeep and Tata Motors Ltd. (TTMT)’s Jaguar Land Rover start production in the country, allowing them to avoid paying custom duties that add at least 25 percent to the sticker price.

SUV demand helped Great Wall boost net income last year by 66 percent and more than double its share price. The automaker’s Hong Kong-traded stock is up 53 percent this year, beating the 0.8 percent decline in the benchmark Hang Seng Index. (HSI)

The automaker boosted its SUV sales to 279,956 units, according to its annual report. That compares with the 316,000 SUVs that Land Rover sold in the financial year ended March, and Jeep’s sales of 701,626 vehicles.

Great Wall, which counts Russia as its largest overseas market and Iraq as its fastest-growing, has said it plans to spend 5 billion yuan ($816 million) in the five years ending 2015 to strengthen product development and technology research.

Great Wall wants to develop its own technology so that it can own the patents and have the “final say” on its product strategy, Wei said today at the event showcasing the automaker’s technology.

“A lot of leading automakers in the world are based in small cities or in the countryside,” he said. “Baoding is a small city, but we believe that we become an excellent company.”

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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