Guangzhou Automobile Group Co. (GAC), the largest automaker in southern China, and Gonow Auto Co., a small privately owned SUV and pick-up truck manufacturer based in Taizhou, Zhejiang, have signed today an agreement to create a 51:49 joint venture, the Information Times reported Thursday.
GAC, a partner of Toyota Motor Corp. and Honda Motor Co., has agreed to retain the existing management team of Gonow in the new company, which will have a registered capital of 1.26 billion yuan ($189 million) and will be lead by Gonow chairman Liao Xuezhong.
Gonow will not largely adjust its product planning, and will still focus on production of micro vehicle, SUV and pickup in the long term. However, its development scale must be enlarged rapidly because GAC wants to increase sales of the restructed Gonow to 600,000 units by 2015, a source from Gonow told the First Financial Daily in October.
Gonow, which sold around 40,000 vehicles last year, currently owns three vehicle manufacturing plants, seven machinery part plants and one research center. Net assets of the company are valued at approximately 3.2 billion yuan.
On April 26, 2010, GAC and Gonow signed a strategic cooperation agreement in Hangzhou, according to which the Guangzhou-based automaker will allocate a certain amount of cash to restructure relevant assets of Gonow and build a new company under the name "Guangqi Gonow", in which GAC will hold 51% stake and the rest 49% stake will belong to Gonow.
This is the first deal in which a state-owned enterprise will acquire a private company in the auto industry and will set an example for similar deals in the future, en.21cbh.com said.