Beijing's party bosses have blessed the union of domestic car makers Shanghai Automotive Industries Corporation and Nanjing Automobile Corporation.

Shanghai Auto is VW and GM's domestic partner in the lucrative PRC automobile market. Nanjing Auto is the parent company of rejuvenated British nameplates Rover and MG.

Since no foreign car manufacturer can operate in China without a domestic partner, automakers like GM have had to spend money assembling joint manufacturing facilities in the world's second largest car market and operate them with jointly with small Chinese firms.

The longtime beef here is that Beijing has been keen on strengthening the nation's industrial might (and the nation overall) and would like to see it free from relying on foreign enterprises. At present the majority of cars on the PRC's roads are foreign nameplates (mostly VWs) built domestically.

By consolidating two of the biggest car makers in the country, the Chinese auto industry is set to become more independent and more competitive against global brands. And someday, perhaps sooner than companies like GM or VW know, these once small, but now united carmakers will have little use for the giants from Detroit and Wolfsburg.

[Source: Detroit News]