Gov't urged to allow automaker's overseas M&A

Shanghai, March 13 (Gasgoo.com) Guangzhou Auto general manager Zeng Qinghong, a deputy to the ongoing session of the National People's Congress (NPC), said that Chinese automakers should be allowed by the government to have overseas mergers and acquisitions, People's Daily reported today.

"Amid the global financial crisis, some global automakers are striving for survival. This presents a golden opportunity for Chinese auto companies to conduct overseas mergers and acquisitions, to buy and restructure the troubled carmakers of other countries. Our government should issue a supportive policy to encourage this," Zeng proposed.

While some time-honored auto companies in the European and North American markets are struggling on the verge of bankruptcy, Chinese auto industry is greeting the arrival of a new spring, he said. China's auto sales in February, spurred by the small-car sales tax cuts and other stimulus measures, grew 25% from a year earlier to more than 820,000 vehicles, reversing a four-month downturn.

Last month, the Chinese government released its auto industry restructuring plan, calling for domestic automakers, especially the large ones such as SAIC and FAW, to merge and restructure small ones in the country to form 10 Chinese auto groups. Meanwhile, auto industry regulators required Chinese carmakers to be cautious about buying assets from global auto companies.

As an auto industry executive and one of the drafter of the Chinese auto sector stimulus package, Mr. Zeng also suggested that the government should allow the potential car buyers to use their shares of the national housing fund for their car purchase. A similar proposal was previously dismissed as unfeasible by the housing and financial authorities.