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Strengthen Cohesiveness and Give Full Play to Group Advantages Jianghuai Bus Restructures Troika
In response to the intensifying competition in China's passenger car market, industry leaders are actively seeking transformation and innovation. Among them, JAC Group, a well-established player with significant strengths, is undergoing strategic changes to stay competitive. On December 29, 2003, Hefei Bus Manufacturing Co., Ltd., a subsidiary of Anhui Jianghuai Automobile Group, invited media representatives nationwide to announce a new development plan for its "troika" — Hefei Bus, Jianghuai Hongyun, and Hefei Xingma. Although details were not fully disclosed, the company emphasized that specific actions would be revealed in March 2004, signaling a major shift in strategy.
The integration aims to strengthen internal cohesion and leverage the group's overall advantages. According to Jiang Renhuai, deputy general manager of JAC Group and chairman of Hefei Bus, the three entities have faced challenges due to overlapping operations and market competition. To address this, the group seeks to streamline operations and better align its commercial vehicle strategy with the development of passenger cars, utilizing JAC’s chassis expertise. This move also comes as JAC recently acquired 28% of Ankai Bus shares, positioning itself as a major player in the commercial vehicle sector.
Externally, changing market dynamics, such as the declining influence of state-owned capital in tourism transport, have pushed JAC to consolidate its resources. The goal is to create a more unified front, allowing the "troika" to complement each other in responding to fierce competition. The reorganization, however, is not without challenges. Differing corporate cultures, ownership structures, and geographical locations complicate the process. Hefei Bus is state-owned, while Jianghuai Hongyun involves Hong Kong-based partners, and Hefei Xingma is located in Yangzhou, making management more complex.
JAC also aims to expand its sales channels, moving from direct sales to multiple distribution networks. With a production capacity of around 5,000 units in 2003, JAC hopes to boost output to 8,000 units by the end of the year, aiming for a top-five position in the passenger car market. Additionally, JAC plans to invest 240 million yuan in a new Kaisbauer bus production base in Chongqing, further strengthening its presence in the high-end luxury bus segment.
Ankai Bus, known for its advanced technology and luxury models, has been integrated into JAC’s broader strategy. While JAC focuses on mid- to low-end buses, Ankai targets the premium market, filling a critical gap in the product lineup. This diversification allows JAC to cover all segments of the passenger car market, enhancing its competitive edge.
Technologically, JAC buses stand out for their fuel efficiency and cost-performance. With an average fuel consumption of just 16 liters per 100 km, they offer significant savings compared to conventional vehicles. As oil prices continue to rise, this feature becomes a key selling point. Moreover, JAC’s strong foothold in the chassis market — holding 30% of the 6-9 meter bus chassis market — further strengthens its position.
Despite these efforts, JAC faces challenges, particularly in the passenger car segment, where competition is fierce and margins are thin. By developing passenger cars, JAC aims to reduce risks associated with chassis sales, which typically account for about half the cost of a bus. This strategic shift reflects a broader effort to adapt to market demands and ensure long-term sustainability.
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