Beijing Auto to buy Fujian Motor, Chrysler

Shanghai, March 9 (Gasgoo.com) As an automaker listed by the Chinese government to become one of the country's auto giants, Beijing Automotive Industry Holding Corp (BAIC, or Beijing Auto) is expected to get Beijing city's financial support of 10 billion yuan ($1.47 billion) for acquisitions and restructuring and for own brand creation, said Economic Observer newspaper yesterday.

Beijing Auto, a local state-owned automaker that makes Hyundai, Mercedes and a few local brands, has set up a work team in charge of the acquisitions and restructuring affairs, which will mainly involve its merger of a smaller Chinese carmaker Fujian Motor and purchase of U.S. auto giant Chrsyler's assets.
 
Sources revealed that Beijing municipality will extend to Beijing Auto funding of up to 10 billion yuan. Five billion yuan will be used to buy Fujian Motor, a company that already makes some Chrysler models in China, including the Grand Voyager minivan. The remaining five billion yuan will be used to buy Chrysler's seven models, an R&D center, engine model, assembly line and to create own brands.

Chrysler LLC quit a joint venture between Beijing Auto and Daimler AG in late 2008, a year after Daimler sold its control of the U.S. automaker, but Chrysler's 300C sedan is still made at the Beijing venture. Sources said Beijing Auto's work team has flied to the U.S. for asset-acquiring talks with Chrysler.

Fujian Motor, a Chinese partner of Mitsubishi Motors, also has joint ventures with Daimler AG -- Fujian Daimler, which produces Daimler's commercial vehicles such as Mercedes-Benz Vito and Viano. The carmaker in southeast China has not confirmed Beijing Auto's move yet for mergers.

In its recent auto industry boost plan, China has listed Beijing Auto as a candidate for becoming one of the country's future four tier-2 Chinese auto groups which will each make 1 million vehicles annually.

Beijing Auto achieved 75 billion yuan in sales revenue last year and expects the figure to reach 100 billion yuan in 2009, which its top management previously said would be achieved by mergers and acquisitions.