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Coda Great Wall letter of intent–filing for divorce from Hafei?

August 20, 2011

I am going to make a prediction about Coda Holdings, www.codaautomotive.com the Santa Monica-based company that has for what seems like years—probably because it started saying it in 2009—that it will sell electric vehicles assembled here in the U.S.  http://www.codaautomotive.com/news-press-release/2009/060309-unveils-2010-all-electric-cars-consumers.html  The glider (i.e. body) was to be produced at Hafei Motors in China; the battery produced at a Coda joint venture with Tianjin Lishen www.lishen.com.cn in China.  Other drive train parts would come from U.S. supplier companies (but some of those parts are probably made in China, too.)

Those EVs still aren’t here. But, on August 15, Coda announced it had signed a letter of intent with Great Wall Motor Co. www.gwm.com.cn to develop electric vehicles. http://www.prnewswire.com/news-releases/coda-and-great-wall-motors-enter-into-electric-vehicle-agreement-127798853.html Coda will contribute the EV drive train and Great Wall the rest, I assume. Though Phil Murtaugh, CEO of Coda, told me the deal with Hafei was still on, I predict that Hafei will soon be little more than a bad memory and that Coda and Great Wall be happily married.

One only need consider the two potential partners to arrive at that conclusion. Great Wall is one of China’s fastest-growing automakers. Its sales grew 76% in 2010 to 397,362 units, according to J.D. Power and Associates. www.jdpa.com Great Wall exports to some 120 countries, according to Murtaugh. That includes European countries and Australia. It expects to export some 80,000 units this year, according to Great Wall’s website.

Great Wall is privately-owned, sort of. The chairman, Wei Jianjun, owns a big chunk of the company. But the Baoding government, where Great Wall is based, owns a chunk, too. Or used to. And, part of Great Wall is listed on the Hong Kong stock exchange. In any case, it operates somewhat like a private company. And by that I mean it is very open to new ideas and flexible in its thinking. And of course, Wang Fengying, the president of Great Wall, is a woman, which can only mean the company is very forward-looking!

Great Wall started out producing pickups, then added SUVs.  In recent years, it has added a line of passenger cars that have a reputation for being
quite well made. At least I read that in a J.D. Power report, and would JDPA say it if it wasn’t true?  Great Wall has a technical center, designs its own vehicles, and works with a number of foreign suppliers.

I visited Great Wall back around 2005, before it has really started to grow. It was only producing pickups and SUVs at that time. Then, Wang told me about its expansion plans, including hiring engineers from other countries. Baoding isn’t exactly the most exciting place to live, I countered. Do you think it will be hard to attract them? (Baoding is a small, non-descript city about an hour and a half from Beijing. Maybe less now; a very  nice highway connects the two cities.) Oh, she said, they can live in Beijing. They can even live overseas. I thought that was pretty flexible. Overall, I was impressed.

So for years I’ve said good things about Great Wall. And I’m pleased that my initial impression seems to have been correct. Murtaugh said he
has known Great Wall since 2002, during his days at General Motors. www.gm.com  It seems he has been looking for a way to work with Great Wall every since. “I approached them when I was at General Motors, with Chrysler, www.chrysler.com with Coda. They are a good company, they are trying to do EVs, they showed me their EV.  ‘I said I think we can help,’” he told me.

Now let’s consider Hafei. Hafei Motor Co. is a subsidiary of state-owned Chana (aka Changan) Group, www.chanaglobal.com China’s fourth largest auto group.  Chana bought Hafei Motor Co. in 2009. Hafei sold 220,330 units in 2010, down 10% on the previous year, according to J.D. Power.

You be the judge. Where does Coda’s future lie?

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4 Comments leave one →
  1. August 20, 2011 8:09 pm

    No surprise here. Phil Murtaugh has been a huge proponenet of Great Wall for years. Coda’s problem has certainly been more about homologation and a willing engineering team with an inflexible attitude at Hafei than it has been Coda’s inability to perform their stated goal. Great Wall is a very forward thinking company, quick on it’s feet and will be a far more willing and able partner for Coda. While it sets them back a bit, it also moves them forward more quickly and on more solid ground in the long run. The platforms and assembly capability that exist at Great Wall are far superior to Hafei and Madam Wang a far better leader to work with. I wish Mr. Murtaugh and his team great success at Great Wall.

  2. August 20, 2011 9:51 pm

    Yes, I, too, have been a Great Wall fan for years, nearly as many as Phil. I do wonder how Coda will extricate itself from the Hafei deal, but I am sure it will eventually.

  3. Lawrence permalink
    September 25, 2011 6:18 am

    “…Hafei will soon be little more than a bad memory….”
    Or, perhaps under new Chang’an direction, Hafei will the one to call it off…
    Lord knows, Chang’an has lots of irons in the fire these days.

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