Chery, JAC merging to form Da-An Motors

Shanghai, July 24 (Gasgoo.com) The Anhui provincial government is set to merge Chery Automobile Co and Jianghuai Automobile Co (JAC) and turn them into the so called "Da-An Motors" Group by end of this year, the Shanghai Securities Journal reports on Thursday.

Citing an informed source, the newspaper said the auto-industry team sent by the Anhui provincial government, where Chery and Jianghuai is based, will unveil detailed scheme on the merger deal before the end of year. The source said the two sides may hold stakes in each other to form a full scale alliance instead of a complete acquisition by any part.

"If the merger happens, Chery and Jianghuai will operate independently for at least five years before they begin to consider mutual product development," the source said.

Jianghuai's sales has slipped in 2008 due to a weakened demand in the MPV sector, but the introduction of a small car lineup has helped to boost its sales since the beginning of this year. Chery is renowned for making small cars, and the automaker is planning to move into the premium and compact segment with the launch of several new cars later this year.

The two companies product line up does overlap, especially as Chery want to promote MPV production, a sector where Jianghuai already keeps a strong foothold.

The Anhui provincial government has issued guidelines this May supporting alliances and mergers among automakers within the province in response to the government's call for creating competitive automobile giants.