Khaberni - Overnight, employees and managers at Rising Auto found themselves facing a new reality; the parent group SAIC (SAIC) decided to halt the independence experiment that began three years ago, bringing the brand back to be a “division” within “Roewe,” one of the main brands of the group strongly present in the local Chinese market for decades.
This news, that shook the automotive industry in Shanghai, contains figures that explain this painful surgical decision.
The Free Fall of Sales:
The decision was not surprising to observers closely following the Chinese market; how could an ambitious brand continue while recording a sales decrease nearing 90%, which acted as the "coup de grâce" on the brand’s independence. According to the Yicai Global report, SAIC did not just merge but also changed the course for 63 managers and officials, in an attempt to salvage what can be saved from the group’s investments in the luxury electric sector.
Reasons for the Collapse and Its Impact on Markets:
There were multiple reasons leading to this failure; among them, the lack of differentiation against fierce competitors, and the failure of the battery-swapping technology to attract a wide fan base compared to “NIO.” But the most significant impact is what the consumer will feel, especially in the Arab region:
1. Uncertainty of fate: Current owners of Rising Auto cars might face challenges in “Resale Value” after the brand has lost its independent identity, despite SAIC's promises to merge service networks.
2. Sorting of dealers: Dealers around the world and in the Middle East will become more cautious in contracting with new "emerging" Chinese brands, and will prefer to connect with traditional major brands that have proven their ability to protect their models from sudden disappearance.
Survival of the Fittest:
What happened to Rising Auto is an "alarm bell" for all Chinese companies that over-expanded. The market that includes more than 100 electric brands has started to expel the weak. Today, the competition no longer concerns who has the bigger screen or stronger acceleration, but who has a “long breath” and sales covering the high development costs.
