Hong Kong-listed automaker Brilliance China Automotive Holdings Ltd. recently announced that it would sell the ZhongHua-branded sedan business it holds in Shenyang Brilliance Jinbei Automotive Co., Ltd. to its parent Brilliance Auto for CNY 494 million.
According to the plan of Brilliance Auto, the two proprietary brands, ZhongHua and Jinbei, will be operated independently, and a new firm will possibly be created for the ZhongHua brand.
Some securities analysts pointed out that Brilliance China was just striving to spin off the self-developed sedan brand that kept losing money so as to reinforce its own profitability and financing ability.
The ZhongHua-branded sedans, targeted at the medium- and high-end market, had witnessed a sluggish sales volume in the past. Its sales volume stood at 91,356 in 2008, falling 14.4 percent year on year, and the monthly sales volume in the first half of 2009 was still below 10,000 on average.
By December 31, 2008 and June 30, 2009, Brilliance China had separately lost CNY 729.5 million and CNY 934.8 million from its ZhongHua-branded sedan operations, told previous reports.
After this deal, Brilliance China will be in possession of only two complete vehicle businesses, Brilliance BMW and Jinbei, and then its financing ability will be further strengthened.
The Brilliance Jinbei President Liu Zhigang, however, lately argued that Brillance Auto would operate the ZhongHua brand via a dedicated new firm named Brilliance ZhongHua (transliterated), and the sedan and commercial vehicle brands would be sold in separate sales networks, which will do good to both the brands.
Notably, days ago, Brilliance China and its German partner announced in Beijing that they would invest more than CNY 5 billion into their joint venture BMW Brilliance Automotive Ltd.
They will each contribute half of the investment, and use the money to build a new factory in Shenyang, capital of the northeastern Chinese province of Liaoning.
The project is predicted to be launched in 2010, and its potential production capacity will initially stand at 100,000 vehicles a year and jump to 300,000 ones in the future.
The new factory will be located in the economic and technological development zone of the city. It will drive up the output of BMW 3 series and 5 series longer wheelbase products.
An engine factory will also be constructed in the project. BMW Brilliance now owns a plant in Dadong District, Shenyang.
