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Hafei, Changhe set for merger into Changan Auto

November 06, 2008

Shanghai, November 6 ( China's Ministry of Industry and Information Technology (MIIT) is pushing for the merger of Hafei Auto and Changhe Auto into Changan Auto Group, in an attempt to form a mini-vehicle giant of a million-unit capacity in China, reported Beijing News today, citing sources familiar with the matter.

According to MIIT's scheme, Changhe Auto and Hafei Auto -- the two car-making companies of China Aviation Industry Corporation -- will be merged into Changan Auto Group as its subsidiaries. After this merger, the expanded Changan Auto Group can restructure their mini-vehicle capacities, engine (and other parts) supplier relations, and sales networks. The three companies have been controlled by the central government, so the merger project will not interfered by local authorities.

"This will be more a government-urged restructuring project than an effort to expand the capacity. To boost the capacity separately is highly risky and will consume vast land resources, and construction of new plants might be blocked by many local regulations," said an MIIT insider, adding that great synergy can achieved more quickly and effectively by the merger of the three state-run car-making enterprises.

The three carmakers have much in common, as all of them originated from China's former military industry, with expertise in making mini vehicles powered by 1-liter to 3-liter engines. Their merger is expected to fulfill larger production, reduce the costs and improve their competitiveness.

After the merger, Changan Auto Group will become China's first auto giant of making 1 million mini vehicles annually. Last year, the output / sales of Changan Auto reached 800,000 vehicles, while Changhe and Hafei hit 400,000 units together. That means the merger of the three can immediately create a combined annual capacity of at least 1.2 million vehicles.

Japanese carmaker Suzuki Motor has reportedly proposed the merger of its two Chinese partners Changan Auto and Changhe Auto in its effort to help them promote their good unity and productivity and avoid bad competition with each other.

A lot of mergers and acquisition activities are going on in China auto sector now. A sign of industry consolidation ?

19,058 Posts
Changan to take over carmakers from AVIC

November 10, 2009
It was announced in the middle of last year that the central government plans to consolidate the Chinese car industry, which now stands at around 89 different manufacturers and brands. The first to merge were SAIC and Nanjing MG, which made them into a regional power house, the Anhui duo Chery and JAC are rumoured to be merging sometime next year but in the meantime Chang’an has become the car company to accquire another.

The Aviation Industry Corporation of China (AVIC) currently has two car making ventures in China, one of which is the Changhe Automobiles, and the second is Harbin’s Hafei Automobile, these two entities will be signed over to Chang’an Automobile according to an announcement made this morning in the Great Hall of the People in Beijing.

The buyout also includes Changhe’s Suzuki joint venture and Harbin Dongan Auto Engine Company which also has a joint venture with Mitsubishi Automotive Engine. The deal looks set to give Chang’an a massive boost in the Chinese market place now that it has access to a wide range of vehicles, as well as engine joint ventures with foreign partners.

Financial details have not yet been released but as soon as the assets have been merged, AVIC will hold a 23% stake in the newly formed Chang’an Automobile Group, whilst the majority of shares will be held by Chang’ans parent company, China Weaponry Equipment group.

The “New Chang’an” will boast a yearly production 2.2 million vehicles, and is expected to produce nearly 5 million vehicles by 2020.

Chang’ans third quarter profit was over 300 million profit this year, partly thanks to its multiple joint ventures with Ford, Mazda, Volvo, and Suzuki, as well as its own vehicle line up.

From China Car Times

19,058 Posts
Suzuki's two JVs in China to become a single entity

Japanese automaker Suzuki Motor Corp's two joint ventures in China are expected to soon be combined into a single entity after a milestone merger between its Chinese partners.

A top executive from State-owned Chang'an Motor Corp, China's third-biggest auto group, said "we are studying" the amalgamation between Chang'an Suzuki and Changhe Automobile Co Ltd. "We will make it soon."

Chang'an Suzuki operates in Chongqing municipality in the nation' southwest, while Changhe Suzuki has its production facilities in East China's Jiangxi province.

In November, Chang'an signed an agreement with Aviation Industry Corp of China (AVIC), a State-owned aircraft maker, to take over its main auto assets including Changhe, the joint venture Changhe Suzuki and others.

In return, AVIC received a 23 percent stake in the enlarged Chang'an from the carmaker's parent China Weaponry Equipment. The deal represented the biggest merger in China's auto industry.

In preparation for merger of the two joint ventures, Chang'an reshuffled the top management at Changhe.

In January, Zou Wenchao, former vice-president of Chang'an and executive vice-president of the group's joint venture with Ford Motor Co, was named chairman of Changhe.

Li Li, also former vice-president of Chang'an, was designated general manager of Changhe.

A top official from Suzuki China recently announced that the Japanese automaker supports the merger of Chang'an Suzuki and Changhe Suzuki. The Japanese company expects to combine sales networks as the first step.

Chang'an Suzuki, formed in 1993 with a registered capital of $190 million, produces Suzuki's SX4, Swift and Alto micro and subcompact cars. It now has an annual production capacity of 200,000 vehicles and 200,000 engines. It has more than 3,000 employees.

Sales by the joint venture rose by 21 percent last year to 150,069 vehicles. It aims to move 180,000 units this year, according to data from market research firm JD Power.

Changhe Suzuki was established in 1995 with a registered capital of $251.8 million. It has the capacity to manufacture 200,000 micro buses and cars as well as 150,000 engines.

It has almost 2,000 employees. Its sales grew by 26 percent to 89,968 units last year.
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