SAIC Says It Will Be In The Hybrid Game In 2011

China's third-largest automaker, SAIC Motors, says it will gear up its hybrid production for the domestic market by 2011. The company will sell its vehicles under its own brand. According to SAIC, the vehicles are now in a testing phase and will come to the market in large numbers within three years.

The company is wrestling with how to cut its production costs on the vehicle, in order to cut the price tag for the end user. Currently, SAIC says that the cost of the car is 20% higher than that of its comparable conventional models. The company will invest nearly $1 billion in research and development for hybrid technology.

Company officials also backed away from their earlier claims that they were interested in an overseas acquisition of possibly General Motors or Chrysler. Instead, the company says it will concentrate on developing its position in the domestic Chinese market and meeting the Chinese government's request to produce 2 million vehicles with Chinese automaker First Auto Works (FAW). Earlier this year, SAIC suspended production at its British factory, based on a steep decline in demand for the company's vehicles.

The company says its January sales were up 7.6% from the same time last year, due in large part to heavy investment by the Chinese government. Officials say, however, that they expect to see an overall first quarter decline in sales of nearly 5 percent.

Photo Credit: Courtesy of SAIC Motor Co.