Guangzhou Auto delays IPO on slowing sales

Shanghai, November 27 (Gasgoo.com) Guangzhou Automobile Group Co., the Chinese partner of Toyota Motor Corp. and Honda Motor Co., has delayed plans for an initial public offering (IPO) due to slowing cars sales and plunging stock markets, said Shanghai Securities News today. However, Guangzhou Auto will move ahead with its plan to launch its own-brand cars by 2010.

China's stock regulator has restricted IPO approvals to halt a sharp decline in the country's stock market this year. Growth of cars sales in the world's second-largest auto market also slowed to 10% in the first 10 months, less than half the pace for the whole year of 2007, as a cooling economy stunted demand.

"How could we sell shares in the current market situation?" general manager Zeng Qinghong said yesterday. "We will choose a better time for the IPO when the markets turn around." Passenger-car sales may rise as much as 10% next year, with demand picking up from the third quarter, Zeng said. The government should also cut taxes on new cars to help spur demand, he added.

Zeng declined to say whether the company planned to hold its IPO in Hong Kong or on the mainland. Guangzhou Auto's share sale, previously planned for this year, was intended to help fund the development of own-brand cars, due to be introduced in 2010. The delay won't affect the timetable for the new models, Zeng said.

Guangzhou Auto has decided to spend 6.8 billion yuan (US$996 million) in developing own-brand vehicles, he said in March. The automaker, which makes cars at the profitable car ventures with Honda and Toyota, is adding new autos and commercial vehicles to reach its sales goal of 1 million units a year by 2010.

While still biding its time for IPO, the carmaker in southern China will adjust its output according to the market demand and recruit more auto talents for its own-brand development project. The company said it has no intention to buy any assets of the crisis-plagued U.S. automakers.