Brilliance says had approach but no FAW talks

Brilliance Auto, BMW's partner in China, has been approached about a possible takeover but has not discussed a merger with larger rival FAW Group, as reported in domestic media, its chairman said on Wednesday.

"Neither I nor any other Brilliance executive has up to now had any discussions with FAW about a merger," a spokeswoman quoted Brilliance Chairman Qi Yumin as saying at a company event.

Chinese media reported recently that FAW was in talks to take over Brilliance Jinbei, which makes the group's self-developed Zhonghua sedans, known as the BS6 and BS4 overseas, with an eye to eventually buying the parent group.

Qi said, however, that he would not oppose a takeover deal if it could help the group to shore up its own vehicle brands, the spokeswoman said.

"We have laid out our development scheme and we are working hard on it," he was quoted as saying.

A takeover of Brilliance would mark another major step toward consolidating China's fragmented auto industry, after market leader SAIC Motor's $286 million acquisition of Nanjing Automobile Group late last year.

Beijing has been encouraging mergers and acquisitions among the industry's more than 100 players, aiming to create a few national champions able to compete with global giants at home and overseas.

Brilliance, parent of Brilliance China Automotive Holdings, secured a deal in 2006 to sell 158,000 sedans to Europe over the next five years.

But it made headlines last year when its BS6 mid-sized sedan received a rating of just one star out of five in a crash test by Germany's ADAC auto club.

Another crash test several months later achieved results equivalent to three stars on the official test, Brilliance has said.

In July, the company said it would begin shipments to Germany of its mid-sized BS4 sedans, which also received the equivalent of a three-star rating in a crash test from an official test house in Europe.

The automaker has also set an ambitious target to more than triple its vehicle sales to 1 million by 2012 from 300,000 in 2007.