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GUANGZHOU -- After Shanghai Automotive Industry Corp. (SAIC) acquired Nanjing Automobile (Group) Corp. in December, another deal between state-owned automotive companies will soon take place.
Dongfeng Motor Corp., a major state-owned automaker, expects to obtain control of two other state-owned companies, Hafei Automobile Group Co. and Dongan Auto Engine Co., over the next two to three months.
Dongfeng will establish its position as the controlling shareholder in the two other companies by investing in a joint venture it plans to form with their parent company, AviChina Industry & Technology Co.
"The joint venture plan will be implemented in the first half of this year," says a Dongfeng executive. The plan has won the support of the central Chinese government, he adds.
The deal will strengthen Dongfeng's position in the domestic passenger vehicle market and allow AviChina to focus on aviation businesses.
According to a recent statement released by AviChina, AviChina will transfer its 54.51% interest in Dongan and a portion of Hafei's auto manufacturing assets into the joint venture. The statement also says Dongfeng will invest cash in the new venture.
The statement does not say which part of Hafei's auto assets will be injected into the new company. It doesn't say how much cash Dongfeng will invest, either.
But the Dongfeng executive says his company will invest enough money to make sure it effectively controls the new company.
Based in Harbin of Heilongjiang province, Haifei mainly produces mini vans and small cars. In addition to Harbin, the company has two production plants elsewhere: one in Weihai of Shandong province and the other in Shenzhen of Guangdong province. The company sold about 240,000 cars last year. Dongan produces small transmissions and 1.1- to 1.3-liter engines. It also runs a joint venture with Mitsubishi Motors in Harbin to supply 1.3- to 2.0-liter engines to domestic automakers. |
