CapitalVue - Pangda Automobile Trade (601258) plans to set up joint ventures in 12 cities with Xinxin Automobile to engage in the sales of Mercedes Benz automobiles, and provide after-sales services, reports stcn.com, citing a company filing.
Pangda will spend less than one billion yuan to obtain a 45 percent interest in each of the joint ventures.
According to the agreement, Pangda will set up 12 Mercedes Benz outlets in 12 cities in Hebei, Shandong, Shanxi and Inner Mongolia. The outlets will be leased to the joint ventures for a term of 15 years.
The lease payments will be negotiated based on market prices, and the joint ventures will be able to extend the leasing agreements for five years.
Xinxing Automobile, registered in Hong Kong, mainly invests in the automobile market.
According to Pangda, the investment could bring in stable returns and cash flow through the lease payments and equity dividends.
