Shanghai, June 23 (Gasgoo.com) The technology transfer agreement between Japanese automaker Mitsubishi Motors and its Chinese partner Changfeng Motor will expire at the end of this month, China Business News reported today.
Mitsubishi Motors' follow-up expansion in China is still under discussion as the merger between Changfeng Motor and Guangzhou Auto has been completed. The Japanese carmaker holds a 14.59% stake in Guangqi Changfeng Automobile Co., the venture of the two Chinese automakers.
Reportedly, the upcoming expiry of the Mitsubishi-Changfeng technology transfer agreement has pushed Changfeng's merger into Guangzhou Auto, as Mitsubishi Motors declined to renew the deal. Hunan province in central China urged the merger to help its local carmaker Changfeng avoid more risks in independent development.
South East (Fujian) Motor, the other China partners of Mitsubishi Motors, has also been involved in the auto industry restructuring in recent years, so the Japanese company is expected to face a great challenge for its growth in the Chinese auto market.
Changfeng Motor, located in Changsha, Hunan's capital city, only sold 26,000 vehicles last year. It reported operating revenue of 4.708 billion yuan in 2008, up 3.23% year on year, while net profit to equity shareholders sagged 23.44% to 140.792 million yuan.
As an SUV maker, the company has realized that the lack of the sedan, a mainstream vehicle product in the Chinese auto market, is one of the great bottlenecks for its development. Its merger with Guangzhou Auto may help it in the sedan segment.
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