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Changhe stops carmaking

Changhe stops carmaking, ends venture with Suzuki!

July 22,2008 - Loss-making automaker Jiangxi Changhe Automobile Co has said it will transform itself into an aerospace company by acquiring two aerospace units worth up to 920 million yuan ($134 million) from China Aviation Industry Corp, reported China Business News yesterday. As a result, the joint venture Changhe Suzuki Auto Co comes to an end.

Changhe Auto, controlled by AviChina Industry & Technology Co, will transfer all of its assets and liabilities and issue up to 90 million new shares to China Aviation in exchange for the two subsidiaries (in Shanghai and Lanzhou), whose combined value is estimated at 800 million to 920 million yuan. Analysts also said that the auto-making facilities of Changhe Auto would be partly transferred to its sister company Hafei Auto under China Aviation.

China Aviation Industry Corp is a state-controlled holding company by merging the country's two state-run aircraft makers, China Aviation Industry Corporation I (AVIC I) and China Aviation Industry Corporation II (AVIC II). According to the restructuring plan, Changhe Auto will shift to the aerospace industry, perhaps making aircraft parts such as aircraft electromechanical components.

Changhe Auto has 41% stake in its joint venture with Suzuki Motor -- Changhe Suzuki Auto Company. Now that Changhe Auto will withdraw from the auto-making operation, it is not a bad thing for Suzuki to end their loss-making partnership. China's industry regulator will decide later who will take over Changhe Auto's shares in the venture and partner with Suzuki.

In its latest five-year plan, Changhe Suzuki vows to reverse its years of losses to profits in 2008, and to raise its vehicle sales from last year's 107,700 units to 400,000 units by 2010. The automaker would also build an independent network for its Changhe brand so as to sell Suzuki and Changhe vehicles through separate channels. But now these ambitions have to be aborted.

Changhe Suzuki has an annual capacity of 100,000 units. Its product portfolio includes the Ideal / Ideal II subcompact cars, the Friend (called the Fuga in Mexico) tiny mini-van, the Freedom mini-van / mini-truck, plus the Wagon R, Landy and Liana mini-vans.

In a local car show earlier this month, the Suzuki Wagon R, Landy and Liana mini-vans made by Changhe Suzuki were named "the most popular fuel-saving, personal and compact vehicle models" in Jiangxi province, where the venture is based.

source: Gasgoo.com
 

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Changhe Auto denies splitting off car operations

Interestingly Gasgoo writes that Changhe denies terminating car producing operations.

July 29, 2008 - Changhe Auto will not split off its car-making operations, and its joint venture with Suzuki Motor will go further after the Jingdezhen-based carmaker is restructured, said Li Yao, Chairman of the Board of Jiangxi Changhe Automobile Co., Ltd to (China's) First Financial Daily on Monday.

Early reports said that the loss-making Changhe Auto will transform itself into an aerospace company by acquiring assets of two aerospace companies and selling its own auto-making assets and liabilities to a unit of China Aviation Industry Group Corp. But the assets transfer of Changhe Auto is only a necessary part of the restructuring plan of China Aviation, and Changhe Auto will continue to focus on its car-making operations, and its cooperation with Japanese Suzuki Motor will go ahead as usual and even further in future, said Mr. Li.

The chairman of Changhe Auto added that after the restructuring is finished the new China Aviation Industry Group Corp will provide more substantial support in policy and finance to Changhe Auto for its auto-making projects. The Changhe-Suzuki joint venture will develop to a higher and broader stage by further developing and exporting Suzuki's new models such as 1.8L Liana, Wagon R, and Landy.

Changhe Auto had sold the most mini-vehicles (with 40% market share at its best) in China for six straight years before 2006, but due to lack of product variety and weak control of costs, it made losses in 2006 and 2007. However, the sales of its more various mini-buses and mini-sedans hit 53,744 units in the first half of this year, up 35.26% year on year. The prospects of Changhe Auto's sales have begun to look rosier than expected.

In its latest five-year plan, Changhe Suzuki vows to reverse its years of losses to profits in 2008, and to raise its vehicle sales from last year's 107,700 units to 400,000 units by 2010. The automaker would also build an independent network for its Changhe brand so as to sell Suzuki and Changhe vehicles through separate channels. And now these ambitions seem not to be abandoned.
 

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Changhe Auto, Hafei Auto to develop separately.

November 3, 2008 (Gasgoo.com) - The China Aviation Industry Group Corporation (AVIC), formed following a government-ordered merger between AVIC I and AVIC II one week ago, will develop its two subsidiary automobile companies separately, the Economic Observer reported Monday in Beijing.

"The Harbin Hafei Automobile Industry Group and Jiangxi Changhe Automobile Co will focus on their own auto operations independently, without a substantial consolidation between the two,” Wang Shuhong, marketing director of Changhe Auto, told the newspaper.

State-run aircraft maker AVIC II controls both the Hafei Auto and loss-making Changhe Auto and the aviation group has long been planning to combine the two automakers to avoid their product confrontations.

But industry experts have been skeptical of the synergies of the combined companies. According to Jia Xinguang, an independent auto analyst based in Beijing, such a move might result in a heavier burden for the aviation group.

Actually back in 2002 the two sister automakers together occupy some 40.9% of China's mini-vehicle market, but since then, their market share has been dwindling due to lack of product variety and weak control of costs. By the end of this year the two automakers are expected to report losses of 353 million yuan ($51.6 mln).

Despite heavy losses, the two auto companies are making efforts themselves to meet challenges. Hafei’s sales manager announced recently the car maker will launch two new models, the re-vamped Saima and Saibao models for the first two quarters each next year.

In its latest five-year plan Changhe Auto stressed that it will manage to make profits in 2008, and its sales volume is set to hit 400,000 units by 2010. The Suzuki Splash will be produced in joint venture Changhe Suzuki Automobile in 2010.
Bad news after bad news for those two carmakers. Hope the situation will turn around soon.
 

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Changhe planning to leave parent Changan

Although Jiangxi-based Changhe Automobile succeeded in retaining Changhe Suzuki's production rights, the manufacturer is still unhappy with owner Changan. According to a report appearing in the Beijing Times today, the managerial staff Changan has sent over to Changhe have either resigned or been suspended. Changhe has reportedly also begun implementing plans to break away from parent Changan.

Changhe will select members from its own staff to take up the now vacated positions, sources from Changhe Auto and Changhe Suzuki were reported as saying. Changhe Deputy General Manager Zhou Jiazheng and Sales Division Director Chai Wei are among those who have reportedly left.

According to sources from Changhe, difficulties between the two companies were increasing daily, leaving Changhe with no choice but to break up with Changan. Sources add that the manufacturer's financial prospects look especially bleak at the moment.

Earlier this month, both companies and the local authorities engaged in extensive trilateral talks, with the end result being Changan promising to uphold its promises to Changhe. Changan also allowed Changhe to select a new general manager from its ranks to replace its former GM Li Li.

http://autonews.gasgoo.com/china-news/changhe-planning-to-leave-parent-changan-120131.shtml
 

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The governor of Jiangxi Province Lu Xinshe recently called for a "restructuring" of the local vehicle maker Changhe, giving an official boost to its effort to break away from the Chongqing-based Changan Auto. According to Securities Daily, on behalf of Changhe provincial officials are negotiating with Changan and its owner, the central government, on the terms of a divorce.

Previously an arm of the Aviation Industry Corporation of China (AVIC), Changhe Auto became part of Changan in November 2009, together with Hafei, Dongan Auto Engine, and their Sino-foreign joint ventures–Changhe-Suzuki and Dongan-Mitsubishi. The mergers, arranged by the central government (in particular, the State-owned Assets Supervision and Administration Commission, or SASAC), made Changan the fourth largest auto conglomerate in China, after FAW, Dongfeng, and SAIC.

For many at Changhe, it was a forced marriage. They feel being sold out and ignored. In early 2012, learning that Changan planned to transfer the production permit of Changhe-Suzuki to Changan-Mazda (which needed it to split from Changan-Ford), they went on strike and forced managers sent from Chongqing to leave.

"We currently get neither technology nor money from Changan, and have not launched a new Changhe model since the merger. We must leave it and look for better partners," says a Changhe official.

In Jingdezhen, a place known as the "Porcelain Capital" and home to Changhe, the local government is also discontent. In May 2010, Changan’s Chairman Xu Liuping signed an agreement with the city, promising to build a new production base there which would roll out 500,000 vehicles and 300,000 engines a year. Changan, however, later reneged on the deal.

After quitting Changan, Changhe would be owned by the provincial government of Jiangxi. According to a source close to the matter, the planned revival strategy would include three main parts: look for a partner that is also based in Jiangxi; strengthen cooperation with Suzuki; seek investors to solve the money problem for developing new models. For the first task, JMC (Jiangling Motor) is said to be the ideal choice, while Jiangxi Copper may be a main financier of the independent Changhe.

http://chinaautoweb.com/2013/08/changhe-auto-seeks-to-quit-changan/
http://autonews.gasgoo.com/china-news/changhe-automobile-ask-independent-from-changan-130802.shtml
 
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