Changan Auto set to merge AVIC auto operations

Shanghai, November 5 (Gasgoo.com) Changan Automobile (Group) Co., Ltd. is set to announce on Nov. 10 its merger of the auto-making operations of Aviation Industry Corporation of China (AVIC), the parent of Hafei Auto and Changhe Auto, after several months of painstaking talks, the Economic Observer reported today.

This will be possibly the first merger and restructuring of auto businesses to take place between two state-owned giant enterprises in China. A top executive of Changan Group has confirmed that the merger is "a sure thing if nothing unusual happens."

Some auto-related media agencies have received a letter of invitation today from Changan Group, which invites their reporters to attend the company's press conference in the Great Hall of the People in Beijing on November 10 (Tuesday).

A senior AVIC official said in August that his company was still in talks with Changan Auto on the matter of merger, and AviChina Industry & Technology Co., Ltd., AVIC's Hong Kong-listed subsidiary, later said it would focus on aviation business and cast off all auto-making businesses by the end of this year.

AVIC launched its auto division in Beijing in March, with Hafei Auto, Changhe Auto, Dongan Power and some other auto or auto-parts businesses of AVIC included in it. AVIC determined at that time to boost its auto business and expected to sell 400,000 vehicles and 800,000 engines annually by 2011.

Changan Group said earlier this year that it would likely integrate both Hafei and Changhe into its subsidiary Chongqing Changan Automobile Co., which could restructure their minivan capacities, engine (and other parts) supplier relations, and sales networks. 

A military-turned-civil enterprise (like AVIC) and a Chinese partner of Ford Motor, Changan Group plans to double its minivan capacity to 1.2 million units from the current level in two years and triple that capacity to 1.8 million units within five years.